Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — MINISTRY OF LABOUR

Unemployment Benefit

Mr. Ioan L. Evans: asked the Minister of Labour what action is proposed to deal with the situation where different employment exchanges in the same area pay different benefit rates to employees effected by the same industry dispute.

The Parliamentary Secretary to the Ministry of Labour (Mr. Ernest Thornton): We have no evidence that this situation exists. If my hon. Friend will give me details of particular cases I will gladly look into them.

Mr. Evans: Would my hon. Friend look into the case of the Austin workers laid off last month who were held to be ineligible for unemployment benefit at Selly Oak Employment Exchange, while other exchanges ruled that they were entitled to benefit? Is there not a need

for simplification of the procedure for making claims?

Mr. Thornton: I know that the procedure is necessarily rather complicated. If my hon. Friend could give me the names of persons who have received different scales of benefit, I will gladly look into the matter.

Earnings

Mr. Fisher: asked the Minister of Labour by what percentage earnings have increased in the last 15 months; and how this compares with the previous 15-month period.

Mr. Thornton: The latest figures I can give the hon. Member relate to the 15 months from August, 1964, to November 1965, and August, 1963, to November, 1964. During these two periods the average earnings of weekly paid and monthly paid employees taken together rose by 8·7 per cent. and 9·2 per cent. respectively.

Mr. Fisher: As the Government have failed to hold wage increases within the 3½ per cent. target of their incomes policy, may I ask the hon. Gentleman at least to try to ensure that future increases are genuinely paid for by greater productivity and by the elimination of restrictive practices, and not merely by the arguments of comparability? I am thinking particularly of the railwaymen.

Mr. Thornton: I should point out to the hon. Gentleman that in the 15-month


period of his own party's Government with the slight overlap to November, 1964, the actual increase was greater than in the 15 months of this Government, with the slight overlap into the period of his party's Government. I am not going to enter into an argument, in reply to a supplementary question, on the issue of the incomes policy. This was fully debated less than a month ago.

Industrial Training Centre (Peterlee)

Mr. Shinwell: asked the Minister of Labour what proposals he has for the provision of an industrial training centre in the new town of Peterlee to enable mineworkers who have become redundant to acquire the necessary skill for employment in other industry.

Mr. Thornton: I consider that the existing Government training centres in Northern Region, at Felling, Billingham and Tursdale, together with the new centre to be established at Killingworth, should be able to meet demands for skilled work from redundant miners. My right hon. Friend does not therefore propose to set up a centre at Peterlee.

Mr. Shinwell: Does his right hon. Friend mind if I disagree with him? Will his right hon. Friend take note that the trade union movement in the area, which knows something about this matter, continues to press for an industrial training centre in the area, and that to talk about Felling, which is nearly 40 miles away, and other places 30 and 20 miles away, is no use at all?

Mr. Thornton: Unfortunately, all our evidence and experience shows that only a very few of the redundant miners are interested in, and suitable for, training in the Government training centres. I should be grateful if my right hon. Friend would bring his very great influence to bear upon the miners, and persuade them to take advantage of the facilities available.

Dame Irene Ward: In view of what the hon. Gentleman has said, may I ask him whether the policy of the training centres is linked to the wishes of the Coal Board on the North-East Coast? Does he not agree that it is important there should be such a link and that proper use should

be made of the centres, in the way that the Coal Board desires?

Mr. Thornton: That is very largely the position.

Sheltered Workshops (Training Allowances)

Mr. Kenneth Lewis: asked the Minister of Labour whether he is satisfied that the weekly rates of training allowances paid to trainees in sheltered workshops is adequate; and if he will make a statement.

Mr. Thornton: These allowances are kept under close review and were increased as recently as October last year.

Mr. Lewis: But does not the Parliamentary Secretary agree that these people are among the most hard hit people in the community? They can look forward only to a very long period of hardship. Now their rates are quite out of line in view of the Government's recent announcement on unemployment rates, and they should be increased as a first charge on the Welfare State.

Mr. Thornton: I appreciate the hon. Gentleman's very great interest in this important problem and these very human cases, but, seeing that we increased the rates as recently as last October, I cannot undertake that we shall review them in the immediate future.

Pensions (Transferability)

Mr. Carter-Jones: asked the Minister of Labour if he will take steps to protect the pension rights of redundant workers; and if he will make a statement.

Sir J. Eden: asked the Minister of Labour what steps he now proposes to take to recure the full transferability of pension entitlements.

The Minister of Labour (Mr. R. J. Gunter): I have nothing to add to the reply I gave the hon. Member for Hitchin (Mrs. Shirley Williams) on 7th February.

Mr. Carter-Jones: Is my right hon. Friend aware that considerable hardship is being experienced by people who are declared redundant after giving long service to firms and are not allowed to take their pension rights with them? Many


of them have stayed with firms out of loyalty, and, consequently, many of the things they hoped to acquire are lost to them through no fault of their own. Will my right hon. Friend please take some action in this matter?

Mr. Gunter: I am very much aware of the problems which arise when workers are made redundant. The Report of the Committee of the National Joint Advisory Council draws special attention to that question. I hope that consultations will take place in the very near future.

Sir J. Eden: Would not the Minister agree that, in order to facilitate the mobility of labour, full transferability of pension rights should be brought about as quickly as possible? Can he give any indication of how soon this will become official Government policy?

Mr. Gunter: We are awaiting the result of the deliberations on what is a very complex problem. One of the factors which we have to face, and which the Committee faced, was that transferability should be applied to mobility of labour in every case, whether it be caused by redundancy, voluntary leaving, or whatever it may be. We want to get fully to grips with transferability.

Mr. William Clark: If the right hon. Gentleman's Government will not give a pledge on this matter, we on this side of the House will. As soon as the Government scuttle, we will put the legislation into operation.

Mr. Gunter: I rather detect a fear of redundancy on the hon. Member's part.

Mr. H. Hynd: What was done in this connection during the reign of the last Government?

Mr. Gunter: There were very long deliberations.

Employment Exchanges

Mr. William Hamilton: asked the Minister of Labour what steps he intends to take to modernise the facilities provided and the techniques used by the employment exchanges, in view of the rapid growth of employment agencies.

Mr. Gunter: The measures I outlined in reply to Questions on 12th April last are being pursued vigorously as part of

the National Plan. In addition, an experimental occupational guidance service for adults will begin on 1st March.

Mr. Hamilton: Does my right hon. Friend recognise that the country in general welcomes the proposal he announced to which he has referred, but can he give any indication whether the Government are dealing specifically with the problem of professional, secretarial and clerical people? The very fact that they take advantage of employment agencies indicates their dissatisfaction with current facilities at the employment exchanges.

Mr. Gunter: On the latter part of my hon. Friend's supplementary question, a review is taking place of what is happening in the employment agencies. The National Joint Advisory Council hopes to make a report very shortly on their operation. On the first part of my hon. Friend's supplementary question, we are very anxious indeed to deal with professional and commercial people. One of the tasks before us is to deal with the employment exchanges as almost the last relic of the poor law. Professional and executive offices have been opened in some of our great cities, and we hope to develop this concept further.

Unofficial Strikes

Mr. Howe: asked the Minister of Labour what proportion of the stoppages of work due to industrial disputes in 1965 was caused by unconstitutional strikes, that is to say strikes that were in breach of procedure agreements.

Mr. Gunter: From the known figures of official strikes it can be estimated that from 90 to 95 per cent. of the strikes which occurred in 1965 and in the preceding five years were unofficial and most of these strikes were in breach of procedure agreements.

Mr. Howe: Do not the figures which the Minister has given reveal a very serious state of affairs and make out an extremely strong case for the proposal put forward by my right hon. and hon. Friends that procedure agreements should be made enforceable as the best way of stopping unconstitutional strikes?

Mr. Gunter: The position has been serious for five years—indeed, for more


than that. But I am not yet convinced by the arguments of right hon. and hon. Members opposite that legislation is the way to deal with this matter. It is now being argued at length, and evidence is pouring in to the Royal Commission with different views on the question of legislation. Let us not forget that unofficial strikes can sometimes be laid at the door of the employers.

Mr. Orme: Can my right hon. Friend say how many of the disputes which started as unofficial were later designated as official and dispute pay paid by the appropriate trade unions?

Mr. Gunter: Not without notice.

Sir K. Joseph: I recognise that we cannot judge the merits of a dispute without knowing the facts, but if the Minister has not decided that legislation is necessary, why did his Department come out virtually in favour of the proposal just put from this Box by my hon. and learned Friend the Member for Bebington (Mr. Howe)?

Mr. Gunter: My Ministry put before the Royal Commission what I thought was a first-class document weighing the pros and cons of this argument. I should have thought that the very nature of its evidence would lead us to leave the matter until all these things can be gathered together. If labour courts are to be created, let us make a good job of them.

Iron and Steel Industry (Fatal Accidents)

Dr. Bray: asked the Minister of Labour what were the reasons for the sharp increase in fatal accidents in the iron and steel industry in the third quarter of 1965 to over double the average rate for the previous two years; and whether he is satisfied with the safety measures in this industry.

Mr. Thornton: Quarterly figures can fluctuate considerably. The total for 1965 was just under a third higher than the average for the previous two years and was the same as for 1961 and 1962. On the second part of the Question, one can never be satisfied with safety measures as long as we are faced with large numbers of serious accidents. Nevertheless, a good deal of valuable

work is being done by the industrial organisations concerned. We shall continue to support and encourage the development of these activities.

Dr. Bray: Would my hon. Friend recognise that the increase is too large to be accountable by random factors? Will he see whether safety measures are being neglected to economise in maintenance costs in old steel mills which are likely to be closed in a few years?

Mr. Thornton: The British Iron and Steel Federation has appointed two safety officers to have particular regard to the point raised by my hon. Friend. The industries are doing the best that they can in very difficult circumstances. We are very concerned about this matter, as the industry and my hon. Friend are, and we shall watch it very closely.

Defence Contracts and Export of Arms

Mr. Marten: asked the Minister of Labour if he will estimate the number of workers engaged on defence contracts for Her Majesty's Government and for the export of arms.

Mr. Thornton: The answer to the first part of the Question is 366,000 in manufacturing industries at November, 1965, and, to the second part, that the information is not available.

Mr. Marten: As it is now the Government's firm intention to increase the export of arms, can the hon. Gentleman give any idea how this will affect the labour force? Will there be an increase in the labour force on arms manufacture?

Mr. Thornton: The question about the export of arms would be better directed to my right hon. Friend the President of the Board of Trade. But the trend of employment in the defence industries, on defence contracts, has been to decline for the last four or five years.

Building and Construction Industry (Redundancy Payments Act)

Mrs. Shirley Williams: asked the Minister of Labour what discussions he has had with the building and construction industry about the application of the Redundancy Payments Act to that industry; and with what results.

Mr. Urwin: asked the Minister of Labour what arrangements he has made with the construction industry in connection with the operation of the Redundancy Payments Act.

Mr. Gunter: On 17th December, I had discussions with representatives of both unions and employers about the application of the Redundancy Payments Act, including the provisions for exempting employees covered by agreements making suitable provision for redundancy. The employers and trade unions have since had joint discussions and agreed that they need more information about labour turnover in the industry. They have decided to pursue this with the Economic Development Committees for the industry, which are already discussing arrangements for inquiries on this and related studies.

Mrs. Williams: While thanking my right hon. Friend for his detailed Answer, may I ask him if he does not agree that it suggests that the casual nature of the trade is one of the great difficulties in making redundancy schemes work, and will it now be possible to bring groups of firms together in order to engage in a wider spread of redundancy schemes?

Mr. Gunter: On the latter part of my hon. Friend's question, we have already made provision for that. On the first part, we think that there could be greater decasualisation throughout the whole industry.

Mr. Urwin: I thank my right hon. Friend for his replies to the Question and to the supplementary question, but does he not agree that the high degree of mobility in the construction industry is a very large contributory factor to the difficulties about the Redundancy Payments Act? If so, should he not take early steps to decasualise the construction industry?

Mr. Gunter: Yes, indeed. I accept what my hon. Friend has said.

National Minimum Wage

Mrs. Shirley Williams: asked the Minister of Labour whether he will introduce legislation establishing a national minimum wage.

Mr. Gunter: I have no present proposals for such legislation.

Mrs. Williams: While thanking my right hon. Friend for that Answer, may I point out to him that there are 150,000 families whose heads earn less than the National Assistance Board's subsistence rate, and does he not agree that our incomes policy will succeed only if we can bring justice to the lowest-paid workers in the community?

Mr. Gunter: Yes, indeed, and provision was made in the White Paper for consideration of the lower-paid workers. On the first part of her supplementary question, I am not quite so sure that the way to deal with the point that she raises is by a national minimum wage. One of the studies which I think she has recently been reading, "The Poor and the Poorest," reveals that it is the low-wage earner with a large family who is living below the National Assistance Board level. I do not know that a national minimum wage affects that proposition.

Sir K. Joseph: Can the Minister tell the House that the point behind the question of the hon. Member for Hitchin (Mrs. Shirley Williams) is being taken seriously and considered urgently by the Government, if not by a national minimum wage, which we know would have many implications for differentials and industrial-costs, then by some other means?

Mr. Gunter: Yes, indeed.

Productivity (Trade Union Practices)

Sir J. Eden: asked the Minister of Labour what steps he will take to reduce the number of cases where productivity is impaired by union insistence on unreasonable manning practices.

Mr. Weatherill: asked the Minister of Labour what steps he will take to prevent continued limitation of output by the occurrence of demarcation disputes.

Mr. Gunter: I shall continue to give all the help and encouragement I can to both employers and trade unions to follow up their undertakings in the Joint Declaration of Intent to lead a sustained attack on all obstacles to efficiency.

Sir J. Eden: Would not the right hon. Gentleman agree that the situation demands that he should act with a greater sense of urgency than that? Is there not sufficient evidence to show that the requirement to over-man machines is seriously delaying the introduction of new


industrial techniques throughout British industry. Will he not do more about it?

Mr. Gunter: I am always open to advice, but it is generally accepted by a lot of hon. Members opposite that over-manning in industry is always the fault of the unions. It is not true at all. A lot of the over-manning in industry today is caused by management, for reasons which I understand. On the other hand, a lot of over-manning restrictions that are placed, to our detriment, on the introduction of new machines are because men fear the loss of their jobs—which is an atmosphere in which some of us will be operating for a few months.

Mr. Heffer: Is my right hon. Friend aware that many employers hang on to workers for longer than is necessary in order to maintain a labour force as against their competitors?

Mr. Gunter: That is true. There is over-manning in industry today which arises from the shortage of skilled labour. Employers hold on to it when perhaps they would be serving the economy better if they released it.

Mr. Howe: Can the Minister give the House an assurance on one aspect of the problem? The Prices and Incomes Board has already identified a number of cases of over-manning and restrictive practices. Have the Government in mind the establishment of an effective body for following up, as far as they can be followed up, those practices with a view to removing practices about which we already know?

Mr. Gunter: If the hon. and learned Gentleman will read some of the reports, the emphasis that was placed by the Prices and Incomes Board was that management and trade unions should get together. I could not say offhand in how many, but following reports in three or four cases there have been moves by both sides in industry to try to come to terms with the problems outlined in those reports.

Government Training Centres

Mr. Geoffrey Lloyd: asked the Minister of Labour how many persons aged 45 years or over were being trained in Government training centres at the

latest convenient date; and if he will reserve a proportion of places in such centres for older people, including those normally employed in white collar or managerial posts.

Mr. Thornton: On 12th April, 1965, there were 179 persons over 45 years of age being trained in Government training centres. We would be glad to recruit more such people for training and our officers have recently been instructed to pay special attention to this but it would not help to reserve a proportion of places for them.

Mr. Lloyd: Is the Minister aware that this is an increasing problem in Birmingham, with firms being forced to go to other districts as a result of the Government's policy? Would he not make known more widely the facilities that there are for older men, including some of the executive grades?

Mr. Thornton: We will certainly do that. The right hon. Gentleman will be interested to know that of the small number of applications by men over 45 for places at Government training centres, the acceptance rate for them was 63 per cent., whereas for those under 45 it was 68 per cent. So the difference in the acceptance rates is very small.

Mr. Mawby: asked the Minister of Labour whether he is satisfied that there are no obstacles to the employment to the full extent of their capabilities of people retrained in Government training centres; and if he will make a statement.

Mr. Thornton: I am satisfied that most people trained in Government training centres are being employed in jobs using the skills they learned at the centres. Follow-up surveys of trainees are however in progress and these should give our Department more precise information on the extent to which skills taught at Government training centres are used in subsequent employment.

Mr. Mawby: While I am grateful to the Minister and hope that the result of the inquiry will be positive, may I ask him to do everything he can to reduce any obstruction that there may be from any quarter, otherwise the work of the excellent training establishments will be wasted?

Mr. Thornton: We shall certainly attempt to remove any obstructions, and I think that the result of the survey will help us to pinpoint where they are.

Semi-skilled Labour (Retraining)

Mr. Shepherd: asked the Minister of Labour if he is aware of the need to retrain semi-skilled labour in skilled trades; what steps are being taken to this end; and whether he is obtaining the co-operation of the craft unions.

Mr. Thornton: I am well aware of the need to train unskilled and semi-skilled labour in skilled trades in which there are shortages. Indeed this is one of the main purposes of Government training centres, of which there are at present 30, with eight more opening this year and next. In general co-operation of the craft unions with our Department's vocational training scheme is good.

Mr. Shepherd: Will the hon. Gentleman say how many persons during the course of this year will be so retrained and accepted into semi-skilled and skilled employment?

Mr. Thornton: I am afraid that I could not give that information.

Mr. Howe: Is the Minister aware of the very serious allegation contained in the evidence of the Engineering Employers' Federation to the Royal Commission that his Ministry has decided not to continue the expansion of engineering training facilities at the Denton Training School because of the lack of co-operation from the craft unions in the Manchester area? Will he look into it and assure the House that his Ministry is not reacting in that way to obstructive attitudes of that kind?

Mr. Thornton: We will look into that. I would point out that, so far as engineering is concerned, 50 per cent. of places in all Government centres are now devoted to engineering.

Restrictive Practices

Mr. Shepherd: asked the Minister of Labour if he will introduce a Bill designed to contain the restrictive practices of labour along the lines of the Restrictive Practices Act and to extend the power of the existing court to deal with the restrictive practices of labour.

Mr. Longden: asked the Minister of Labour if he will introduce legislation to prevent trade unions insisting upon machines which could be operated by semi-skilled labour being manned by skilled labour.

Mr. Gunter: No. Legislation is not the way to tackle these problems.

Mr. Shepherd: Does not the right hon. Gentleman realise that there is no labour shortage in the country except the labour shortage that we ourselves are making? It is perfectly useless to go on hoping that pious exhortation is going to have any result. If the right hon. Gentleman cannot put pressure on employers and unions together by means of legislation, we will lose out in the industrial battle.

Mr. Gunter: The hon. Member assumes that legislation would work in this matter. I again assert that until we have had a look at all the aspects of industrial relations, one simply cannot do it. Greater efficiency in working and better industrial relations will start only on the workshop floor level, and all the politicians in the world will not alter that by legislation.

Sir K. Joseph: Since the Government have shuffled off their responsibilities to a Royal Commission which, in the words of the Prime Minister, will take minutes and waste years, will the Minister not at least undertake to follow up systematically all restrictive practices of the like found by the Prices and Incomes Board and indicated in its various reports?

Mr. Gunter: I thought that I had already indicated that it is what we are doing, with the co-operation of management and unions.

Married Women

Miss Quennell: asked the Minister of Labour what steps he is now taking to make it easier for married women to return to work.

Mr. Thornton: Our employment exchanges are in constant touch with employers about adjusting hours of work and other conditions to enable women to combine employment with their family responsibilities. Further possibilities will be considered in the light of the results of the recent survey of women's employment.

Miss Quennell: Would the hon. Gentleman consider two further lines of approach? First, would he have discussions with his right hon. Friend the Minister of Pensions and National Insurance to see whether some modification can be obtained of the National Insurance obligations of employers in respect of part-time employees? Secondly, would he consult his right hon. Friend the Chancellor of the Exchequer to see whether the fiscal impediments whereby a wife's income is assessed with her husband's for Surtax purposes can be removed?

Mr. Thornton: These are certainly very complicated issues, which, as the hon. Lady said, affect both my right hon. Friends the Minister of Pensions and the Chancellor of the Exchequer. I will certainly look at the matter.

Mrs. Renée Short: Will my hon. Friend consider asking employers to set up nurseries attached to factories to encourage married women with young children to return to work?

Mr. Thornton: That is one of the many matters which is under consideration in the survey now taking place.

Industrial Disputes (Conciliation Officers)

Mr. Hamling: asked the Minister of Labour on how many occasions in 1965 conciliation officers from his Department intervened in industrial disputes in order to prevent a stoppage of work; what industries were concerned; and how many workers were affected by such disputes.

Mr. Gunter: In 1965 my conciliation officers intervened in 406 disputes. A substantial number were in the engineering and metal using industries and in transport but there was a wide spread over large variety of industries. Information is not available as to the total number of workers affected.

Mr. Hamling: Will my right hon. Friend ensure that the good work of his officers is given publicity? Good news travels slowly. Would this not offset some of the anti-union publicity from the benches opposite?

Mr. Gunter: I am very grateful for any compliment which comes my way as Minister of Labour these days. On the

other hand, I think that there is a need for an extension of this work. The conciliation officers throughout the country do a magnificent job of work, very often under great difficulties.

Mr. Kenneth Lewis: Is the right hon. Gentleman aware that many of us on this side of the House believe that if he and his conciliation officers had been allowed to act—instead of the Prime Minister prolonging the agony—in the recent railway dispute, they would have solved that one too?

Printing Industry (Industrial Training)

Mr. Hamling: asked the Minister of Labour if he is aware that a conference is to be held on industrial training in the printing industry in April 1966 under the auspices of the London College of Printing; and whether he will arrange for an official from his department to attend.

Mr. Gunter: Yes, Sir. An officer of my Ministry will attend the conference and has accepted an invitation to address it.

Mr. Hamling: Is my right hon. Friend aware that this conference is being organised by a trade union branch and is being given wide support from the trade union movement in the printing industry, an industry which is supposed to be, according to some people, rather backward?

Mr. Gunter: Yes, Sir.

Industrial Training Boards

Mr. Wellbeloved: asked the Minister of Labour if he will publish a White Paper on the operation of industrial training boards.

Mr. Gunter: No Sir. Boards are required to make annual reports and the Central Training Council to report from time to time. These reports are published as White Papers. The first report from the Central Training Council was published in November, 1965.

Industrial Disputes (Labour Courts)

Mr. Howe: asked the Minister of Labour what assessment he has made of the extent to which stoppages of work


due to industrial disputes would be reduced in number if disputes were referred quickly to some sort of local tribunal or labour court.

Mr. Gunter: No precise estimate can be made. The desirability of setting up labour courts will no doubt be considered by the Royal Commission on Trade Unions and Employers' Associations.

Mr. Howe: In view of the fact that the Minister appeared this afternoon to make personally favourable noises to the idea of industrial courts and that he visualised extended legislation for the industrial tribunals set up under the Redundancy Payments Act, may we take it that he would be in favour of the establishment of industrial courts to provide quick resolution of industrial disputes?

Mr. Gunter: What I should like to see emerge—I know of the sneers which are made at the Royal Commission—is an analysis of all the evidence from all our industrialists and trade unionists as to how labour courts can operate, how comprehensive they are, what legal authorities they can determine. To act in isolation over only one aspect of the problem would be fatal. I emphasise that I should like to see a considered report by the Commission and then proceed along the line which I believe is getting growing support.

Ship-Repair Workers (Redundancy Payments Act)

Mr. Blenkinsop: asked the Minister of Labour, whether he will make a statement regarding the application of the Redundancy Payments Act to ship-repair workers.

Mr. Gunter: I have invited both sides of the industry to discuss this matter with me at a meeting to be held on 8th March.

Mr. Blenkinsop: I welcome that reply, but may I ask my right hon. Friend to do all he can to encourage developments in this respect? As is known, the working of the Act with regard to ship-repair yards involves a number of real problems which, at the moment, cause difficulty both for employers and for employees Any speeding-up would be very helpful.

Mr. Gunter: All I can say in answer is that I hope that the talks on 8th March will be very fruitful.

Dame Irene Ward: While welcoming his statement very much, I would ask the Minister when he hopes that the talks will begin. When the talks have come to a decision and a policy has to be formulated, will he act very quickly to get over this very real difficulty?

Mr. Gunter: I indicated that the talks would start on 8th March. I should not like to prophesy when they will end, but when they do, if the problems can be solved on both sides of industry, I will do all I can to help.

Unemployed Persons (Wheatley Hill)

Mr. Shinwell: asked the Minister of Labour what facilities are available in Wheatley Hill, County Durham, to enable persons unemployed to register, sign on and receive benefit; and whether, when they are required to travel to employment exchanges elsewhere, they will be reimbursed for expenses incurred.

Mr. Thornton: There is a part-time office in Wheatley Hill where unemployed persons in the area sign on and receive unemployment benefit. Initial and renewal applications for unemployment benefit are made at Wingate Employment Exchange. It has never been found possible to pay travelling expenses to persons attending employment exchanges to claim unemployment benefit.
Employment interviews also take place at the main office. I do not think payment of fares for all such interviews is justified, but where necessary travelling expenses are paid to disabled persons.

Mr. Shinwell: Is it not bad enough to be unemployed without having to pay bus fares from Wheatley Hill to Wingate, which is some distance away? This is the second unsatisfactory Answer I have had this afternoon. This is a small matter. I am nor asking for an aircraft carrier.

Mr. Thornton: Most of the registrants at Wheatley Hill live four miles or less from Wingate Employment Exchange and this does not seem to me to be an unreasonable distance to travel for an occasional interview.

Collective Bargaining and Trade Union Rights

Mr. Palmer: asked the Minister of Labour what correspondence he has had with the Confederation of British Indus tries about the recognition by member firms and companies of full collective bargaining and trade union rights on salaries and conditions for staff employees which has obtained for some time in the nationalised industries and the public services.

Mr. Gunter: None, Sir.

Mr. Palmer: Would my right hon. Friend agree that much of private industry is still backward in its recognition of the collective bargaining rights of staff employees? Will he ask the Confederation of British industry, which is supposed to be having a new look at these things, whether it could be a little more helpful than it has recently been in this matter?

Mr. Gunter: On the latter part of the question, I think that I can say, on behalf of the Confederation of British Industries, that it appears to be becoming a little more helpful. On the first part, I agree that collective bargaining ought to prevail in this area as much as in any other.

Equal Pay

Sir W. Bromley-Davenport: asked the Minister of Labour when he proposes to implement Her Majesty's Government's policy of equal pay for equal work between men and women; whether he proposes to await the report of the Departmental working party examining the question; whether he will urge the committee to report without delay; and when the necessary legislation will be introduced.

Mr. Gunter: I would refer the hon. and gallant Gentleman to the reply given to the hon. Member for Clapham (Mrs. McKay) on 31st January.

Sir W. Bromley-Davenport: Can the right hon. Gentleman say approximately what would be the extra cost to industry if the principle of equal pay were put into effect? Would it add to inflation? How would it affect the wages and in-

comes policy of Her Majesty's Government?

Mr. Gunter: One of the great problems in answering that question is that it has been highlighted that none of us is sure what is meant by equal pay for equal work. It means different things in different parts of the world. The purpose of the discussions with the T.U.C. and the C.B.I. is to arrive at a formula on these matters. The cost would depend on how that formula was interpreted, how it was implemented and how long it took, whether it was in part or in full and whether this way or that. Nobody can give a clear answer on what it would cost.

Mr. Rankin: In view of the fact that this system operates efficiently within Parliament, is there any reason why it should not operate with equal efficiency outside?

Mr. Gunter: Yes. Matters are a little more simple in this House than in industry and that is why it makes a difference.

Docks (Devlin Committee's Recommendations)

Mr. Fisher: asked the Minister of Labour when he intends to introduce legislation to implement the recommendations of the Devlin Committee on the Docks.

Mr. Gunter: Legislation to provide for a system of licensing port employers and for welfare amenities for dock workers will be introduced as soon as possible The National Modernisation Committee has reached agreement in principle on a revision of the Dock Labour Scheme and I hope to publish the draft of a new Scheme shortly. The revised Scheme will establish a fully decasualised system of employment, as recommended by the Devlin Report. The Modernisation Committee is also engaged in discussions on pension schemes, sick pay, future wage structure and employment practices in the industry.

Mr. Fisher: All that sounds very hopeful, but as the Devlin Committee reported as long ago as last August, may I ask why there has been this very long delay since then? Can the right hon. Gentleman be a little more specific about when


he proposes to introduce the legislation which he has promised?

Mr. Gunter: I am very surprised at the hon. Member talking like that when we are doing our best to clear up the chaos of almost a hundred years. There are relevant parts of the wage structure in the docks which go back half a century. We are trying to clear up the mess, and that inevitably takes time. I could not go any further about legislation beyond saying that I hope that it will be very shortly.

Sir K. Joseph: While my hon. Friend the Member for Surbiton (Mr. Fisher) is naturally disappointed, perhaps because of the excessive hopes entertained when the Devlin Report was first published, I hope that the right hon. Gentleman recognises that we on this side of the House wish him the very best of luck in his work with the ports and that we shall do all we can when the time comes to get sensible legislation through.

Employees (Trade Union Representation)

Mr. Mawby: asked the Minister of Labour what steps he proposes to take to ensure that, where a substantial proportion of workers in the same grade employed at one establishment wish to be represented by a particular union in negotiations with their employers, they should have the right to such representation.

Mr. Hunt: asked the Minister of Labour (1) if he will introduce legislation to protect workers who, although willing to belong to a trade union, are refused admission to it or are expelled from it unnecessarily;

(2) if he will introduce legislation to reduce unofficial strikes by subjecting the trade union concerned to defined penalties unless it can show to an independent tribunal that it had taken all steps practicable to prevent or terminate a particular strike.

Mr. Gunter: With permission, I will answer Questions Nos. 39, 43 and 44 together.
Action by the Government on these matters would not be appropriate in advance of the Report of the Royal

Commission on Trade Unions and Employers' Associations.

Mr. Mawby: Surely the right hon. Gentleman agrees that matters such as this need dealing with now rather than awaiting the report of the Royal Commission. Surely we cannot put every problem on the shelf until the Royal Commission reports. Would he not look seriously at this problem, which has existed for so many years and caused so much difficulty?

Mr. Gunter: Of course it has. It has been under consideration for many years both at the T.U.C. and at the British Employers' Federation, but I can only say, and I hope the House will forgive me for boring them, that this is one part of the whole picture of industrial relations, and I am desperately anxious to see it as a whole and then to come to complete conclusions about that whole and not about bits of it.

Mr. Hunt: Is the Minister aware that I regard my two Questions as entirely separate and that I can see no case at all for their being taken together in this way? One the specific point of banning or expulsion from trade unions, would not the Minister agree that many unions exercise an entirely arbitrary and autocratic power in these matters and is it not elementary justice that those who feel themselves victimised should have some right of appeal to an impartial body?

Mr. Gunter: I agree with the hon. Member. I could not deny the validity of what he said because I have said it on the Floor of the House. I do not know what the Royal Commission will recommend, but if in the end we have proper labour courts, given statutory powers, then I imagine that within their terms it would be possible for an individual trade unionist to take his protest against his own union to that court. But I do not think that we can do this in isolation.

Later—

Mr. Hunt: On a point of order. Questions Nos. 43 and 44 are entirely diffferent. Does a back-bench Member have any redress against a Minister's decision to take Questions together?

Mr. Speaker: That is not a point of order for me.

Sir K. Joseph: What is the protection for a back-bench Member in these circumstances? The Minister used the formula "with permission". He said that he would answer the Questions together "with permission". Does that in fact mean "with permission"?

Mr. Speaker: Order. That is not a matter for the Chair at all. We must proceed.

Building Employers (Levy)

Mr. Urwin: asked the Minister of Labour how many building employers are currently paying the levy to the Construction Industry Training Board; how many make no contribution at all, and for what reason; and how many of the latter are deemed to be labour-only subcontractors.

Mr. Gunter: I understand that separate figures for building employers as distinct from other employers covered by the Construction Industry Training Board are not available.

Mr. Urwin: Despite that Answer, may I ask my right hon. Friend whether he is aware that the number of self-employed people operating as labour subcontractors appears to be growing with alarming rapidity? Is there any possibility of steps being taken to ensure that these people are employed only by bona fide building contractors?

Mr. Gunter: As my hon. Friend knows, I have had some discussions with his own union on this matter, and they will continue.

Bank Employees (Five-Day Week)

Mr. Hector Hughes: asked the Minister of Labour if he will state the result of his negotiations with the Association of British Bank Employees on the establishment of a five-day working week in conformity with the conditions in other European countries.

Mr. Gunter: I am not engaged in any negotiations concerning a five-day working week for bank employees.

Mr. Hughes: Will my right hon. Friend take steps to see that this important class of worker is treated as well as other workers in the community in the respects mentioned in my Question?

Mr. Gunter: In the absence of any request for negotiations, that is a little difficult. I therefore suggest that the staff associations, trade unions and employers concerned should get together.

Mr. Hughes: That is very good.

Working Women (Children)

Mrs. Renée Short: asked the Minister of Labour how many working women there are with children under five years of age; and what hours they work.

Mr. Thornton: The latest information is for 1962 when there were very approximately half a million working married women who had children under five. Of these, roughly 150,000 were working 10 hours or less a week, their average hours being about six. No information is available about the average hours of the remaining 350,000 or so married women who were working over 10 hours a week.

Mrs. Short: While thanking the Minister for that reply, may I ask him whether he accepts that it is necessary to get accurate and up-to-date information in order to assess the health and educational requirements of small children whose mothers are working? Would he not undertake a research project in his Department to find up-to-date information?

Mr. Thornton: Yes. I agree that the information is very meagre, and we will certainly do what we can to get fuller and more up-to-date information.

Engineering and Shipbuilding (West of Scotland)

Mr. Carmichael: asked the Minister of Labour what is his latest information on the shortage of skilled labour in the engineering and shipbuilding industries in the west of Scotland; and what trades are affected.

Mr. Thornton: At the January count in this area in the main skilled occupations in engineering there were 1,053 notified vacancies for men as against 722 men unemployed; and in shipbuilding there were 253 vacancies as against 168 unemployed. The most considerable shortages were of machine tool setters and turners in engineering, and of joiners, sheet metal workers, sheet iron workers, electricians and plumbers in shipbuilding.

Mr. Carmichael: While thanking my hon. Friend for his Answer, may I ask whether he has any information from his officers in the west of Scotland about the holding of labour by certain firms, not allowing a good distribution of labour for the urgent jobs which are required in other parts of the west of Scotland?

Mr. Thornton: No. I have no information.

Wage Levels (Glasgow Area)

Mr. Carmichael: asked the Minister of Labour what figure his officers give to the National Assistance Board in the Glasgow area when requested for wage levels for skilled and semi-skilled for engineering and building, light and heavy labourers and warehousemen, respectively.

Mr. Thornton: The amounts quoted vary within a fairly wide range according to the exact occupation of the individual concerned and to local industrial conditions. Only broad indications are given in each case.

Fife

Mr. William Hamilton: asked the Minister of Labour how many coal mining jobs have been lost in Fife since 1960; how many new jobs have been provided in the same period; and how many of those jobs were for males and females, respectively.

Mr. Thornton: The number of mineworkers in the County of Fife fell from 19,760 at the end of 1960 to 13,050 at 5th February, 1966. This takes account of transfers to new jobs within the coalmining industry. As regards other industry, during the period April, 1960, to the beginning of this year, 29 firms set up factories in Fife and were by November, 1965, employing 2,600 workers, of whom 1,100 were males.

Mr. Hamilton: Does my hon. Friend recognise that these figures represent a very unsatisfactory state of affairs? What is the good of losing 6,000-odd male jobs and getting fewer than 1,000 male jobs in return? Will my hon. Friend undertake to discuss with the President of the Board of Trade the desirability or the practicability of additional financial incentives to attract to these areas firms

which predominantly employ male employees?

Mr. Thornton: I would point out to my hon. Friend that expanding collieries in the Fife and Clackmannan coalfields will need 3,300 more miners by 1971 and that the Board of Trade estimates that about 3,000 jobs for males are likely to arise in the whole of the Fife coalfield during the next four years.

Hovercraft Industry

Mr. McMaster: asked the Minister of Labour how many men have left the Hovercraft industry since October, 1964; and how many of these have found other employment in British export industries.

Mr. Thornton: I regret that the information is not available.

Mr. McMaster: Is the hon. Gentleman satisfied with the figures his research department is able to provide on such important matters? Will he take steps to make sure that we promote and expand employment in this new development and exploit its export potential to the full?

Mr. Thornton: I must point out that what the hon. Gentleman describes as the Hovercraft industry is interwoven with the aircraft industry; and at present it is quite impossible to extract the information he seeks.

Oral Answers to Questions — FOREIGN SECRETARY (WASHINGTON VISIT)

Mr. Gresham Cooke: asked the Secretary of State for Foreign Affairs what was the cost to the public of the flight taken by himself and his staff in a Pan American aircraft to Washington for defence policy talks.

The Secretary of State for Foreign Affairs (Mr. Michael Stewart): The cost was £536.

Mr. Gresham Cooke: Was it necessary to go by PanAm rather than flying British by B.O.A.C?

Mr. Stewart: There is no B.O.A.C. flight direct to Washington.

Sir A. V. Harvey: Will the Foreign Secretary do what he can to persuade the Secretary of the State Department occasionally to fly by B.O.A.C.?

Mr. Stewart: It has been for a long time understood that Ministers should fly by British lines unless it is really impracticable and not reasonably possible for them to do so. I think that this consideration weighed, for example, when my predecessors Lord Butler and the right hon. Gentleman the Member for Kinross and West Perthshire (Sir Alec Douglas-Home) on certain occasions travelled by Swiss, Scandinavian, Belgian, Portuguese, and Japanese lines.

Oral Answers to Questions — SOUTH AMERICA

Mr. Wingfield Digby: asked the Secretary of State for Foreign Affairs what steps he is taking to promote friendship and closer relations with countries in South America, following his recent visit there.

Mr. M. Stewart: I have agreed with the Foreign Ministers of the three countries I visited that we will engage in much closer political consultation on bilateral and international questions. Other measures, particularly in the field of trade, are subject to consultation with my colleagues. Meanwhile, I would like to think that recent evidence of the importance which Her Majesty's Government attach to Latin America, including my own tour and that of my noble Friend the Under-Secretary of State for Foreign Affairs, has itself contributed to the strengthening of our already friendly relations with the countries of the area.

Mr. Digby: While agreeing that the right hon. Gentleman is to be congratulated on undertaking this trip to a part of the world where there is so much good will towards this country, may I ask him to be quite sure to follow this up and not lose the full effect of the visit?

Mr. Stewart: That is certainly very much in our mind.

Lord Balniel: I, too, welcome the trip which the right hon. Gentleman made to Latin America. Was he able to put forward any proposals for increasing aid to those of the under-developed nations in Latin America?

Mr. Stewart: There was a step which we were able to take and which, I believe, I have previously mentioned in the House,

concerning Chile. We had more general discussions on this and I hope that we may be able to do something.

Oral Answers to Questions — COUNCIL OF EUROPE RECOMMENDATIONS

Mr. Dodds-Parker: asked the Secretary of State for Foreign Affairs what action he will take to implement the recommendations of the Council of Europe passed on 26th January on the general policy of the Council of Europe.

The Minister of State for Foreign Affairs (Mr. Walter Padley): We are considering these recommendations with our Council of Europe partners in the Committee of Minister's Deputies in Strasbourg.

Mr. Dodds-Parker: Will the Minister of State take the matter up with his colleagues at the Board of Trade to see if it is possible to get on with this a bit faster, particularly since there are a number of specific approaches which could be made if the two Ministries acted together on this issue?

Mr. Padley: In so far as there are matters where the Board of Trade and the Foreign Office can collaborate, we are in favour of maximum association with Europe. The position of Her Majesty's Government on our membership of the E.E.C. is well known. Our policy remains that we are ready to enter the Community if certain essential British interests can be safeguarded.

Mr. Snow: Would my hon. Friend take steps to see that the public is somewhat better informed about the deteriorating trade position of this country relative to Europe, which many of us forecast would be the result of the tariff developments of the Common Market?

Mr. Padley: The initiative, which was taken first at Chequers, then at Vienna and then at Copenhagen, was designed to prevent Europe from hardening into two economic blocs. I therefore agree with my hon. Friend.

Mr. Soames: Would the hon. Gentleman say whether he agrees with all the recommendations referred to in the Question and whether he will use what influence he has to see that they are implemented? If not, would he say which are


the recommendations which he would not like to see implemented?

Mr. Padley: We agree entirely with the recommendations.

Mr. Soames: All of them?

Oral Answers to Questions — HOLY SEE

Mr. St. John-Stevas: asked the Secretary of State for Foreign Affairs whether he will now make arrangements to raise the status of Her Majesty's mission to the Holy See from that of a legation to an embassy.

Mr. M. Stewart: I do not consider that it would be appropriate to make this change at the present time.

Mr. St. John-Stevas: What possible justification can there be for this continual discrimination against the Holy See, particularly in view of its obvious diplomatic importance, as evidenced in particular by the recent papal initiative in Vietnam?

Mr. Stewart: It is well known that Her Majesty's Government are very well aware of the valuable part to be played by the Holy See in international affairs. However, the hon. Gentleman will also know that there is a great deal of variety in the practice of representation at the Vatican adopted by various Governments, and I believe that for the present we have the right answer.

Sir Knox Cunningham: Would the right hon. Gentleman say whether there is any statutory bar, such as the Act of Settlement, to this suggested change of status?

Mr. Stewart: I believe not.

Sir W. Teeling: Since we have already got a legation there, would it not be far more practical if we had some form of legation in London in return instead of just having an apostolic delegate?

Mr. Stewart: That really is another question.

Oral Answers to Questions — VIETNAM

Mr. Blaker: asked the Secretary of State for Foreign Affairs what further initiative Her Majesty's Government pro-

pose to take in order to resolve the Vietnam dispute.

Mr. M. Stewart: We shall continue our efforts to promote a negotiated settlement in Vietnam, but there is no new initiative for me to report to the House at present.

Mr. Blaker: Is the right hon. Gentleman aware that President Nkrumah of Ghana is at present on his way to Hanoi to pay a visit there? Is he doing this as a representative of the Commonwealth Peace Mission or not?

Mr. Stewart: No, Sir.

Mr. Philip Noel-Baker: Will my right hon. Friend do his utmost to clarify the position of Her Majesty's Government and of the United States Government about the place which the N.L.F. is to have in the peace conference and its share in the elections which will follow? Is my right hon. Friend aware that the United States spokesmen say something different every day?

Mr. Stewart: I expressed a clear view about this in the foreign affairs debate in the House a little while ago.

Mr. Zilliacus: Would my right hon. Friend make the position still clearer and say unequivocally whether Her Majesty's Government support the N.L.F. being a party to the negotiations, remembering that by doing so we would increase the chances of the Prime Minister reaching some conclusion in Moscow instead of condemning him to a sleeveless errand?

Mr. Stewart: We have no evidence to show that, even if that were said, Hanoi would be prepared to negotiate. I repeat that if it were clearly represented from Hanoi that if this condition were fulfilled negotiations could take place, then I believe that it would be possible to make progress. However, until that happens this is a hypothetical question and not a real one.

Mr. Richard: Would my right hon. Friend clarify the attitude of Her Majesty's Government towards the speech made yesterday by Senator Robert Kennedy in the United States?

Mr. Stewart: That is another question.

Mr. Soames: Is the right hon. Gentleman suggesting that circumstances could


arise In which he would favour representatives of the National Liberation Front being the only representatives representing South Vietnam?

Mr. Stewart: I said nothing of the kind.

Oral Answers to Questions — UNITED NATIONS REFUGEE PROGRAMME (UNITED KINGDOM CONTRIBUTION)

Mr. Randall: asked the Secretary of State for Foreign Affairs what contribution Her Majesty's Government will make to the programme of the United Nations High Commissioner for Refugees in 1966.

The Minister of State for Foreign Affairs (Mr. George Thomson): Her Majesty's Government have decided, subject to Parliamentary approval, to contribute £120,000 to the current programme of the United Nations High Commissioner for Refugees in 1966. The comparable contribution to last year's programme was £100,000. A special additional contribution will also be made equivalent to the tax levied on the sale in the United Kingdom of the gramophone record "International Piano Festival", issued to raise funds for the High Commissioner's programme. Parliament will be asked to approve the 1966 contribution in the estimates for the coming financial year.

Mr. Randall: I thank my hon. Friend for that good news which he has given to the House. In view of the urgent need for additional funds for the High Commissioner for Refugees, is he aware that the generous gesture on the part of Her Majesty's Government will be much appreciated and will encourage other nations to increase their contributions?

R.A.F. RADAR STATION, NEATISHEAD (FIRE)

The following Question stood upon the Order Paper:

84. Mr. HAZELL: To ask the Secretary of State for Defence, whether he will make a statement on the fire at Neatishead radar station in North Norfolk involving loss of life.

The Under-Secretary of State for Defence for the Royal Air Force (Mr. Bruce Millan): With permission, I will now answer Question No. 84.
Soon after mid-day on Wednesday last, 16th February, a fire was detected in the underground operations block of the radar station at Royal Air Force, Neatishead. An unsuccessful effort was made by the station fire services to quell the outbreak and simultaneously the alarm was given to the local fire services in accordance with established procedures. The staff on duty were safely evacuated.
On behalf of my right hon. Friends the Secretaries of State for Defence and Home Affairs I take this opportunity to pay tribute to the gallant efforts of the civilian fire brigades to bring the fire under control. Three firemen lost their lives during the operations, and several other firemen required hospital treatment, of whom three were detained. By Wednesday evening, when it became clear there was no hope of saving the two firemen who were then missing, flooding of the underground block was started, and this has since succeeded in putting out the fire.
A Royal Air Force board of inquiry has been convened and will carry out a full investigation.
I am sure that the House will join my right hon. Friends and myself in expressing our deep sympathy with the bereaved.

Mr. Hazell: In thanking my hon. Friend for that statement, I wish to associate myself with his expression of sympathy to the dependants and relatives of the firemen who gave their lives in the course of public duty, and to express admiration and praise for the firemen from the Norwich and Norfolk brigades who put in such magnificent work under extreme difficulties.
Will the inquiry that is to be undertaken be held in public? Is it correct that the Norfolk County firemen had no breathing apparatus and that this had to be obtained from the Norwich City Brigade, with consequential delay in getting the equipment to Neatishead? Will my hon. Friend contact his right hon. Friend the Minister of Pensions and National Insurance to ensure that there is the minimum of fuss and delay in securing pensions and other allowances that may be due to the dependants?

Mr. Millan: I am grateful to my hon. Friend for his expression of sympathy. In regard to the last point, I will draw the attention of my right hon. Friend to what my hon. Friend has said, and I am sure that things will be done as quickly as possible. The question of firemen's breathing apparatus for the civilian firemen is really a question for the Home Secretary rather than for me. The inquiry will be a private R.A.F. inquiry, as is normally the case in these circumstances, but after the inquiry has completed its investigations it certainly ought to be possible for a further statement to be made.

Sir J. Eden: Would the hon. Gentleman associate all of us on this side with his expression of sympathy? Has he any comment to make at this stage on the adequacy of the fire precautions facilities in the building itself? Is he aware of any lack of a sufficiency of precautionary measures there? Further, would he assure the House that in regard to the operations of the radar station no gap is created as a result of this fire?

Mr. Millan: The adequacy of the fire precautions is something on which, I think, the board of inquiry will be reporting. As to the hon. Gentleman's other question, the station at Neatishead was under periodic maintenance when the fire broke out so that temporarily its operational tasks had already been transferred to other similar stations. This position will, of course, continue, so that there should be no gap in the operational tasks that are being carried out at the moment.

Mr. Prior: On behalf of those of my hon. Friends from Norfolk and Suffolk, I should like to express our condolences with the families and widows of the firemen who lost their lives; and I should particularly like to do so on behalf of my hon. Friend the Member for Yarmouth (Mr. Fell) in whose constituency two of the firemen lived.

Mr. Millan: I am grateful to the hon. Gentleman.

VOTE OFFICE (SUPPLY OF PAPERS)

Mr. Speaker: I wish to make a statement to the House about the procedure for the provision in the Vote Office of older papers required in connection with debates. This amends the statement made on the same subject by my predecessor on 12th December, 1961, in columns 221–3.
The procedure in force since 1961 has been that in advance of a debate the Ministry concerned is under obligation to supply to the Vote Office adequate supplies of all papers—Statutes, Regulations, etc.—which it considers relevant to the debate in question. But it has been found that Departments, in order to avoid any risk of failing to fulfil this obligation, have tended to supply such an extensive variety of documents and in such quantities that the normal functions of the Vote Office are being seriously interfered with.
I have decided, therefore, to accept the recommendation of the House of Commons (Services) Committee that in future a Department should supply to the Library in advance a list of all those older papers which appear to it to be relevant to a forthcoming debate. Members will be able to consult this list in the Library and to order from the Vote Office such papers as they require, besides, of course, any other papers which they may wish to have. If an order is received at the Vote Office before 4.15 p.m., the paper will generally be available in the Vote Office within two hours; any order received after that hour will be executed as soon as possible, but it may not be until the following morning.
In future, the Vote Office should hold stocks of all Parliamentary papers published during the last two sessions, and not, as at present, one Session.
I believe that these changes will result, on balance, in a better service being available to Members, and I should like to thank the Services Committee for considering this matter and tendering me the advice I have given to the House.

Orders of the Day — COMPANIES BILL

Order for Second Reading read.

3.37 p.m.

The Minister of State, Board of Trade (Mr. George Darling): I beg to move, That the Bill be now read a Second time.
The House will know that it was the intention of my right hon. Friend the President of the Board of Trade to open this debate. The task falls to me because he is temporarily out of action, on the sick list. He has asked me to apologise for his absence. I know that hon. Members will join with me in wishing him a speedy recovery.
The Bill is the first step in amending company law in the light of the recommendations of the Jenkins Committee, which was appointed six years ago to report on the provisions and working not only of the Companies Act but also of the Prevention of Fraud (Investments) Act, and on the legislation dealing with the registration of business names.
The House will recognise that a Bill designed to cover all the recommendations of the Jenkins Committee would, therefore, be lengthy, full of legal complexities, and would take up a great amount of Parliamentary time. Because of those difficulties, it has been decided to carry through the reforms that are needed, over this wide field of legislation, in stages. This Bill deals with the first stage and, we think, the most urgent need—the need for the disclosure of far more information in company accounts and directors' reports than is now required.
There seems to be a widespread demand that companies should give a great deal more information about their affairs both to their shareholders and to the public. The Bill therefore has been well received by and large in the financial Press, in the City and elsewhere. Indeed, the main criticism levelled against it is that it does not go far enough. It is criticised not so much for what is in it but for what is left out.
I will come later to what are considered to be the main omissions from the Bill. What is in the Bill, seems to be in the main non-controversial. At any rate

the previous Government, through the right hon. Gentleman the Member for Bexley (Mr. Heath), stated in July, 1964, that they intended, if given a renewed mandate, to introduce legislation
designed to promote the Government's objective of greater economic efficiency, notably by ensuring that investors, creditors, and the general public are given fuller information about the activities of companies.
I must admit that that is a rather vague statement and could mean almost anything or very little. It is a pity that the previous Government were unable to be more specific. Indeed, it is a pity they failed to put their intentions into a Bill. After all, the Jenkins Report was published two years earlier, in 1962, but nothing had emerged to give effect to the recommendations.
It has been left to this Government to introduce these essential reforms in company law, and we have of course gone further than the Jenkins Committee in some respects.
We hold the view, as I am sure the right hon. Gentleman and his hon Friends do, that publicity in this field of business activities is perhaps the most important safeguard against abuse. But disclosure of information is desirable not only in the interests of creditors and investors and prospective investors; it is equally desirable and necessary in the interests of employees and in the interests of Government, for the framing of Government policy in many respects ought to be based on the trading and financial information disclosed by getting on for half million registered companies, and this information is also useful in the interests of an incomes policy and business efficiency.
If that view is accepted, as it clearly is, we have to answer one or two questions. How do we put this obligation on companies to disclose more information? Which companies are we concerned with, and what kinds of information do we want from them? These are the questions the Jenkins Committee examined and the answers, with some exceptions, are in this Bill.
We have to start, of course, with those companies which, for historical reasons, have not been required to file accounts—the so-called exempt private companies. It is estimated that nearly 80 per cent. of the half million companies in the country enjoy this privilege of exemption.


Most of them are small, but some are among the largest of our enterprises.
The Jenkins Committee recommended that the special privileges of exempt private companies should be abolished. We accept this recommendation. It is, in fact, widely accepted, not only to promote disclosure, but to make clear that incorporation with limited liability is itself a privilege which carries obligations to the public. The effect of abolishing this class of company will be that all limited companies will have to file their accounts, which means that they will be open to public inspection.
We recognise that there are many small companies, little family businesses and the like, who may perhaps find this new obligation a burden. In fact the definition of the exempt private company was introduced to help the small private concern, but the complicated wording of the definition has always been unsatisfactory and has allowed quite large companies to have exemptions which it was never intended they should have.
The small firm or family business can still claim exemption from the obligation to produce and file accounts, but only if it forgoes the protection of limited liability. It can, in other words, re-register as an unlimited company. The Bill, following in the main the Jenkins recommendations, provides arrangements for this kind of switch. The first step therefore is to make the general run of companies disclose the information about their affairs which the shareholders and the public are entitled to have.
The 1948 Act, of course, already requires a great deal of information to be given, but as hon. Members know there has been a growing criticism of this part of the 1948 Act. It does not demand enough information. Investors have often been misled about the true state of affairs of companies whose shares they have bought or have intended to buy. I do not want to go over the evidence of investors who have taken some hard knocks simply because they did not know the true state of affairs of certain companies and were unable to find out.
The Stock Exchange itself provides all the evidence we need—backed up by the Jenkins Report—because the Stock Exchange has had to insist on having further information from companies that

were seeking quotation or applying for further issues of securities.
What, in the main, the Stock Exchange wants to know is, first, the relationships of companies, whether through subsidiaries or through major interests in associated companies. To put it colloquially, it wants to know the whole setup before it permits quotations and new issues. Secondly, it wants a proper analysis of trading results where a company or a group of companies carries on widely differing operations. The Stock Exchange—these are among the recommendations—would like to have disclosure of turnover and the issue of interim reports half-yearly, or indeed quarterly.
It is a sad reflection on the lack of action by the previous Government that the Stock Exchange, to its credit, had to impose these stricter rules to protect investors and make further recommendations for tightening things up. The Bill goes further than the Stock Exchange rules, except for the requirement of half-yearly or quarterly reports. The Jenkins Committee thought it unreasonable to impose this on all companies, and we have accepted that view.
The requirement dealing with information which has to be given under the Bill about subsidiaries and about investments in associated companies is inevitably legalistic. I hope that hon. Members have been able to get through the legal jargon better than I have, but I do not think there is likely to be any controversy here about objectives, though there may be some Committee points which we shall have to deal with.
There may, however, be some difference of opinion about disclosing turnover, although we attach a great deal of importance to knowing the turnover of companies. In fact, I do not see how anyone can get a true picture of a company's operations, measure its efficiency and prospects and its contribution to the national economic progress, unless one knows how much trade it is doing. It seems to me to be an essential piece of information which ought to be disclosed. With the present trend for companies to branch out into new lines, to diversify their activities—which I am sure hon. Members will agree is a trend to be encouraged—it is desirable for a company to give the turnover of each of its


different activities. A total figure of turnover without this subdivision would be quite misleading.
It may be argued that to give such detailed disclosure of turnover may expose some companies to more intensive competition in their weakest activities, but I think it will be agreed that this is the kind of competition that is needed if we are to get an economic allocation of resources. To complete the picture, to get a proper assessment of a company's activities and efficiency, its profits should be subdivided in the same way.
It is also valuable to know how much of the trade disclosed is done overseas. I am sure that no one disputes the fact that our economic survival as a major industrial nation depends on a continuous expansion of exports on the one hand, and a great deal more saving of imports on the other. Our living standards cannot be maintained, let alone improved, unless we can sell more goods abroad and at the same time become less dependent on imported manufactures.
We cannot rely merely on exhortation. Every Government since the war has pleaded with firms to get out into overseas markets, and has adopted various measures to help exporters. But in the end the export drive comes down to individual companies. We need to know a great deal more about each company's export performance. We want the overseas trade figures broken down into companies' returns. We can then see where help, guidance and encouragement can be given to improve overseas sales and to persuade companies whose products could be sold abroad to start up in the export business.
Some companies, of course, cannot get into exports. They might not be making products which are saleable overseas or they may be in the components business with no prospects of direct sales overseas, though they may be making an excellent indirect contribution to exports. Such companies can easily make their position clear in directors' reports or in chairmen's statements. This is not a witch hunt. It is a genuine attempt to get at the facts about overseas sales and export prospects, and I feel sure that the majority of companies will accept this obligation in the right spirit and respond to it. Our

national well-being in a large measure rests on their willingness to co-operate.
There are many very important but rather technical provisions in the Bill—for instance the section dealing with insurance companies, the qualifications and duties of auditors, the information that requires to be given in directors' reports, the changes in registration fees, and the attempt, in Clause 25, which I am prepared to explain if anybody wishes me to do so, to unravel a difficult legal tangle about assignment of rights under guarantee.
I want to make only a brief comment on the section dealing with insurance companies. The Jenkins Committee made recommendations for changes in the content of their accounts, and we find that these recommendations can best be implemented by means of a Statutory Instrument under the Insurance Companies Act. But the powers for making Regulations under that Act are not entirely satisfactory, and the changes which are needed to remedy this situation are set out in Clauses 35, 36 and 38. As for the fees set out in the Ways and Means Resolution, the increases are designed for two purposes—to cover the costs of registration—I am sure that everybody will be in agreement there—and also to try to check the proliferation of companies.
I do not know to what extent these and other rather technical matters will be raised by hon. Members during the debate, but whatever queries and comments arise will be replied to by my hon. Friend the Minister without Portfolio when he winds up. He will also explain the arrangements we propose in regard to the exemptions from disclosure which are provided for banks and discount companies in the 1948 Act.
I wish now to turn to two innovations in the Bill which to my surprise have been rather severly criticised in some quarters—the disclosure of directors' emoluments and the disclosure of political contributions. I am truly surprised that anyone in this day and age should even suggest that shareholders ought not to know how much their directors are being paid. The shareholders are entitled to know; and the case for disclosure is, we think, emphatically reinforced by some recent cases arising from disputes in boardrooms about the large sums certain chairmen and directors have been taking out


of their companies. There ought to be no secrecy here. After all, the wages and salaries of almost everyone else in these days from Cabinet Ministers, top civil servants, directors of public industries, through to engineers, coalminers, railwaymen, bus conductors and the rest are public knowledge. We do not think that company directors should be left out.
In fact, we cannot leave them out. But having said that, we do concede that there is a case for not giving too much detailed information, with names, about each director's emoluments. To do so would perhaps involve some companies in unnecessary personal difficulties, for instance where a board desires to attract a particularly able man as an executive director and has to pay somewhat heavily to get him. The right balance between essential public disclosure and acceptable personal privacy is, in our view, to be found in the way the salaries of members of boards of nationalised industries are presented; that is, in bands which indicate the ranges of salaries paid and how many directors are in each band.
This practice, as hon. Members know, has now been tried and accepted for nationalised industries without any public criticism or complaint. But to apply it in the same way to private companies means that the chairman's emoluments will have to be disclosed separately. This requirement has been criticised, as the House will know. We think, on balance, it is desirable to stick to the proposal, even though the company chairman may not always be the key man in the board of directors and not always the highest paid director; but we are prepared to listen to any contrary arguments in Committee.
Some people have protested against even this limited disclosure of directors' emoluments on the grounds that it will lead to public and perhaps trade union pressure for lower pay in board rooms. It might happen, but I would think only in cases where the pay is clearly excessive. If I could venture a personal view here—I hope that nobody will hold the Government to it—what is more likely to happen, I believe, is a revelation that far too many executive directors in British industry—especially among the medium-sized firms—are not getting the proper rate for the job.
This is hardly the time to start a discussion on what the rate for the job ought to be for business executives, and I am not going to run the risk of being quoted out of context. I will only say that the revealing of directors' pay will, we think, help to put a stop to clearly excessive emoluments, and for the run of hard-working executives the consequences may be very different from what some critics expect.
Now let me turn to the disclosure of political contributions. I cannot for the life of me understand why honourable Members opposite get so hot and bothered about this very simple request, that companies which subscribe to political funds should tell their shareholders that part of the profits has been used in that way. Surely, in this as in so much else, the shareholders are entitled to know. After all, it is supposed to be their company. They each have a stake in it, and, if the directors want to play at politics with the company's money, they ought in all fairness and honesty to tell the shareholders what they are doing.
Why not? Here we are discussing a Bill aimed at making companies disclose more information about their affairs. We are in more or less general agreement until we come to payments for political purposes, and then right honourable and honourable Gentlemen opposite suddenly develop a desperate passion for secrecy. They want this one use of the company's money to be kept under cover, hidden away, undisclosed. We would like to know why. I would have thought that by now, in this present stage of development of our political and parliamentary sytsem, no one could argue a case for secret political funds or would wish to do so.

Mr. Kenneth Lewis: Mr. Kenneth Lewis (Rutland and Stamford) rose—

Mr. Darling: When I come to the end I shall deal with all these matters. I have got a lot more to say about political contributions.
The right hon. Gentleman, no doubt speaking for all his right hon. and hon. Friends, gets terribly angry about this and says it is a vindictive proposal. Vindictive? I can only assume that he rushed into this rather maladroit defence of secret political funds without thinking what he was saying. If the right hon. Gentleman wants us to believe that this


obligation on companies is vindictive, how would he describe the similar obligations imposed on trade unions and industrial provident societies? Are they vindictive?
Neither the trade unions nor the co-operative societies think so. On the contrary, they willingly accept the legal obligation to disclose the contributions they make—all their contributions, politics included. They do not want any exceptions. So far as political contributions are concerned, they believe that full disclosure is in the public interest.
If there is going to be any great argument about this, I had better get in at the beginning and remind hon. Members very briefly of the history and the facts of trade union and co-operative societies' rules. I say, "very briefly" because the case for disclosure is so overwhelming that it requires not a great deal of elaboration.
It was the Liberal Government in 1871 that first gave trade unions proper legal protection; and the central provision of the 1871 Act, so far as this controversy is concerned, is very simply stated. The Act required the unions to make returns of income and expenditure to the Registrar of Friendly Societies, and such returns had to
show separately the expenditure in respect of the several objects of the trade union.
One could not have anything clearer than that.
Successive Governments, Liberal and Conservative, subsequently amended and strengthened trade union law, but they never altered that basic requirement to give the facts. No trade union ever wanted to alter it. Yet, in so far as it applies to political expenditure, the right hon. Gentleman now seems to be arguing that it was and is vindictive. If he wishes to be consistent, he should now propose that the trade unions' political expenditure should be excluded and exempted from the strict rule of disclosure.
I want to say this final word about trade unions. There was a dispute in 1910 about whether trade unions should be allowed to make political contributions. That was soon put right. But, in putting it right, the unions had a severe requirement imposed upon them before

they could make political contributions, which still applies and ought never to be removed. A union must consult its members and take a vote before it can spend money on politics. We do not propose to put that obligation on companies. If the directors want to make political contributions they will be free to do so without seeking permission and getting a favourable vote from their shareholders. This Bill puts companies in an easier, less onerous position compared with the much stricter rules of trade unions and co-operatives. Yet the right hon. Gentleman calls it vindictive.
The position of co-operative societies—again I shall be brief—is that they, unlike the trade unions, are trading bodies and so perhaps are closer to trading companies in most respects. Under the Industrial and Provident Societies Acts, under which they are registered, no exemption is permitted them from disclosure of political contributions. Moreover it is very doubtful whether the Registrar would permit a co-operative society to make political contributions unless the authority to do so were specifically laid down in that society's rules.
To get such authority, the society's members have to be consulted and have to agree by a majority vote to set up a political fund. The members also have to agree the amount to be placed each half year in the fund, and how it should be raised. These rules are a very strong defence for co-operative society members who do not want political activities. If they are in a majority and take the trouble so to vote, their society cannot spend a penny for political purposes. We do not propose to give company shareholders that specific protection. I feel sure that some of my hon. Friends will say that that is a weakness in the Bill.
At any rate, I have been surprised at the amount of ignorance and prejudice displayed by some organisations about the position of co-operative societies in this matter. Aims of Industry, for instance, has put out a statement which clearly demonstrates that on this issue, as on so many other issues, it does not know the facts and makes no effort to obtain them. I want to quote this statement because I think it completely destroys any suggestion that the provision in the Bill about


political contributions is a party political manœuvre. The statement says:
If the Government does not intend this Bill to be merely political it must also draft legislation to apply to the co-operatives who make contributions to the Co-operative Party, which in turn makes contributions to the Labour Party.
Of course, there is no need to introduce the legislation that Aims of Industry asks for. It is already there. It has been on the Statute Book for nearly a century, and it is much stricter than under this Bill.
But I would ask hon. Members, if they want to pursue this matter, to take note of the clear inference in the statement I have quoted. It says, in effect, that if co-operative societies are made to submit to disclosure of political contributions then to impose the same obligation on companies cannot be considered a political move. I do not wish to say much more about this issue. It is, after all, only a small part of the Bill. But to show how the law and the Registrar's rules apply to co-operative societies I want to quote briefly from one or two co-operative balance sheets.
Let me take the Nottingham Co-operative Society. The report of its board of directors sets out very clearly that it is making a contribution of £1,820 out of the year's trading. Then it produces a separate account covering two pages to show how the money has been spent—conferences, meetings, printing, stationery, summer schools, weekend schools, literature and so on. All are set out very clearly down to an individual item of £2 14s. I do not want companies to go into all this detail. All that I would like from them in their accounts is what is given at the beginning here—that a contribution of £1,820 was made for political purposes.
Here is the Hull Co-operative Society's report. The same applies. It gives the balance disposable. Then it goes through the details and says, "Co-operative political party, £350." These are vast sums of course!
My own view is that the Oxford co-operative Society sets matters out more clearly, because it has a list of about 40 subscriptions that it makes—probably more—to such things as Oxfam, the Robert Owen Memorial Museum, which

I see gets £1, the Oxford Preservation Trust, the Save the Children Fund and so on. I do not know why it makes a contribution to N.A.L.G.O., but that gets £1, too. Then there are the Workers' Educational Association, the Fire Brigade Benevolent Fund, and, buried in the middle but clearly stated, is, "Oxford and District Co-operative Party, £717."
Why cannot companies do the same thing? I was going to mention the Don-caster Co-operative Society, but I thought perhaps the right hon. Gentleman would prefer me not to. In any case, the Don-caster Society, from a quick glance, seems to give a larger contribution to the Don-caster Rovers supporters' club than it does to the co-operative society, which probably puts us in our right place.

Mr. Kenneth Lewis: The hon. Gentleman has been trying to suggest that everything is a closed book as far as company donations to political funds are concerned and everything is quite open in the trade unions. This is not so, because in the trade unions there is the contracting-out procedure. This is a tremendous cloak, because there are Tories who contribute on the trade union side because of the trouble of contracting out, but the interesting thing is that—

Mr. Speaker: Order. The hon. Gentleman cannot make a speech at this stage. This is an intervention.

Mr. Lewis: Is the Minister of State aware that if a trade unionist has not contracted out and he has retired on a small pension the political levy is taken out of his trade union pension?

Mr. Darling: If the hon. Gentleman is suggesting that we should put in the Bill a provision that a public company cannot make contributions to political funds unless all the shareholders contract in, we are prepared to consider that suggestion, but I do not think that his right hon. Friend the Member for Altrincham and Sale (Mr. Barber) would like it. I hope therefore that hon. Members opposite, and the right hon. Gentleman in particular, will now agree that secret contributions to political parties and organisations with political objectives should have no place in our modern Parliamentary and political system.
I undertook to comment on what is considered by many well-informed people


to be serious omissions from the Bill. I want to refer in particular to directors' share dealings and nominee shareholdings, if I may use that shorthand term. Mrs. Margot Naylor of the Observer, who served on the Jenkins Committee, pointed out in her comments on the Bill that these matters were not as easy to resolve as some people imagined. She went on to say that she did not blame the Government for shirking these issues for the time being. But we do not wish to shirk them.
My right hon. Friend has asked me to say that the present Bill is designed as a first instalment of desirable company law reform, sufficiently compact to be sure of reaching the Statute Book in one Session. He would prefer to see a Bill of medium size passed into law rather than a more ambitious one fail to complete all its stages. On merits, he would favour adding to the Bill provisions for the disclosure of directors' share dealings and disclosure of the beneficial owners of more than a certain proportion of a company's shares. If this is the general wish of the House, and if the right hon. Member for Altrincham and Sale, speaking for the Official Opposition, can assure us today that, while naturally reserving all rights to examine and criticise the Bill, they will co-operate in expediting the passage of these rather non-controversial sections of it, my right hon. Friend will see whether it will be possible to draft suitable Amendments implementing these two provisions for inclusion at a later stage.
I must warn the House, however, that provisions about the disclosure of beneficial owners of shares will be very complicated. I hope that the right hon. Gentleman will be able to respond to my right hon. Friend's invitation. We do not wish to leave these two important matters out of the Bill, but we shall need the fullest co-operation of hon. Members to get them in.
Finally—and I am sorry that I have spoken for longer than I had intended—in presenting the Bill I cannot sum it up better than in the words of my favourite financial journalist who said of it that
The proposals are just the first instalment of company law reform, and a worthy beginning.

We look upon the Bill as a non-party Measure presented for constructive examination, and I commend it to the House.

4.15 p.m.

Mr. Anthony Barber: First, I should like to say, how sorry we are that the President of the Board of Trade is not too well. I should like to express our wish that he will soon be quite fit again. Some of us on the Opposition Front Bench knew last Tuesday when we were debating the White Paper on Investment Incentives and Industrial Reorganisation Corporation that the right hon. Gentleman was not well. He never mentioned the fact and he never made excuses, and we much admired his determination nevertheless to wind up that important debate. Although we miss the right hon. Gentleman from this debate today, I am sure that most hon. Members will agree that we have had a very agreeable speech from the Minister of State.
The Opposition are at one with the Government in believing that there should be greater accountability of companies, and in so far as the Bill ensures that companies become more responsive to public pressure to act efficiently it will have our support. Before I come to consider what we believe should be the principles governing disclosure by companies, I must say that, despite what the Minister of State said, the Government have missed a great opportunity in deciding to confine the Bill almost exclusively to the single matter of disclosure in company reports and accounts.
Eighteen years have now elapsed since the last Companies Act of 1948, and one has only to glance at the recommendations in the Jenkins Report to realise that there are a whole variety of matters of importance—and not only those mentioned by the Minister of State—which are not touched upon in the Bill. It is, with respect, nonsense for the hon. Gentleman to pretend that this is only a first instalment of company law reform. He knows, as everybody concerned with company law and administration knows, that the introduction of major company legislation is a very rare occurrence indeed. I do not know how long the hon. Gentleman will be in his present


position, but if he goes back to his colleagues and asks for a second instalment I am certain that he will be told, "You had your ration in 1966".
It is well worth examining the reason given by the President of the Board of Trade for confining the Bill to the single matter of disclosure. The reason which he gave at his Press conference was that there was no Parliamentary time, but if it had not been for the independent stand taken by his hon. Friends the Member for Pembroke (Mr. Donnelly) and the Member for Bosworth (Mr. Wyatt) there would have been ample Parliamentary time—so the Prime Minister told us—for legislation to nationalise the steel industry. There would have been no difficulty about that. Furthermore, the right hon. Gentleman and his hon. Friends have no hesitation at all in employing the talents of overworked Parliamentary draftsmen and finding time to deal in the Bill with political contributions.
It is a significant indication of the importance which the Government attach to this single Clause in the Bill as compared with the rest of it that out of the total length of the Minister of State's speech of 37 minutes he devoted no less than 17 minutes to this one single Clause. Furthermore, on that very Clause he has dealt with the matter against the advice of the Jenkins Committee—and I will come back to that.
The result is that the Government have failed to tackle a whole series of matters on which the Jenkins Committee advised—matters of great importance not only to lawyers and accountants but to the proper development, in the interests of the nation, of the concept of the limited liability company. Despite what the Minister of State said about it, there is not a word in the Bill about nominee shareholdings or about the disclosure of information concerning beneficial share ownership. If this had been dealt with in the Bill we would have been happy to look at it on its merits and, as far as we thought it right and proper on a non-party matter like that, we would have given it a relatively easy passage.
There is nothing in the Bill to improve the procedure relating to circulars containing take-over offers. There is nothing about no par value shares, which were not even mentioned by the hon. Gentle-

man. Legislation on all these matters and others was promised by my right hon. Friend the Leader of the Opposition in the summer of 1964, when he was Secretary of State, but none of it is here today. It is little wonder that those bodies, non-political bodies, which are concerned solely with the efficient administration of companies are both surprised and disappointed at the content of the Bill.
I shall quote just one example. This is what was said by the Chartered Institute of Secretaries:
For years the Institute has been urging the introduction of amending company legislation making provision…for the increased efficiency of company administration in the interests of investors and the general public. The Institute regrets that the opportunity to further this objective provided by the introduction of the new Bill has been taken to such a limited degree….The Institute accordingly regrets the introduction of what is on the whole an incomplete and unsatisfactory set of proposals viewed from the aspect of efficient company administration.
I shall not weary the House by quoting the exact words in another example, but the Association of British Chambers of Commerce likewise expressed disappointment with the Bill.
The First Secretary of State and some of his colleagues may despise bodies like chambers of commerce—he seemed to do so in the debate we had last Tuesday—but I am sure that the Minister of State would not take a similar view, and I can only hope that the hon. Gentleman who is to reply to the debate will tell us why the Government have taken no steps to implement those proposals in the Jenkins Report which not only are of great importance but which, certainly as regards many of them, would have involved little controversy and relatively simple questions of drafting.
Surely, it would have been reasonable to insist on more publicity about non-voting shares—this is not a matter of great controversy and there was a recommendation about it—perhaps even going no further than to provide that all such shares should be clearly marked and thus known to all holders as having no vote or only a restricted right to vote. Is there not something to be said, also, for giving the holders of non-voting shares at least an entitlement to receive a copy of the chairman's statement? But this whole subject has been completely


ignored. It is not a party matter. There is no great controversy about it. A Conservative Government would certainly amend the law to permit the introduction of equity shares of no par value.
I have referred to some of the more obvious omissions from the Bill because it is this aspect of the matter which, as the hon. Gentleman fairly recognised, has been the source of so much of the criticism. I come now to the provisions in the Bill for greater disclosure in accounts, and I shall say something, first, about the principles which, I believe, should underlie any new proposals of this kind.
Even at the beginning of the last century, the purpose of accounts was not merely to aid the internal efficiency of an enterprise but to provide information for the joint owners of the business. Then, with the introduction of the limited liability company in the middle of the last century, it became necessary to provide information not only for the owners of the company but also for its creditors. Looking at the legislation, as the concept of limited liability was developed over the years, one can see that the main purpose of most company legislation, as regards disclosure, has been to protect shareholders and creditors against abuses of one kind and another.
In recent years, we have moved on a stage further. We are no longer concerned solely with the protection of shareholders and creditors; we are concerned also with the provision of information which will contribute to industrial efficiency and to the best use of our available resources. In this country, we are blessed in this respect with two great advantages. First, we have what is probably the most sophisticated capital market in the world. Second, we have a body of financial journalists, aided by investment analysts, which is second to none. The purpose of all this is to direct capital to those enterprises which are likely to provide the maximum rate of return on the investment. But neither the financial journalist nor the investment analyst can do his job unless he is provided with the facts and figures to enable prospective investors to make their choice with an adequate knowledge of the various alternative investments.
It is with these considerations in mind that we should judge whether the en-

forced public disclosure of any particular information is justified. Those are the criteria. I remind the House that the Jenkins Committee went out of its way to warn against the disclosure of information which, although it might be of interest to those with an inquisitive mind, would not be of any real value and which, in certain cases, might be positively harmful. This is so important that I shall read to the House what the Committee actually said about it. It is paragraph 13:
…While…we share the views of the Cohen Committee as to the importance of ensuring that companies should make available to shareholders, creditors and the general public as much information as is reasonably required, we also recognise the importance, where the desirability of some proposed new statutory obligation to provide information is in question, of considering whether the additional information would be of any real value to the persons receiving it, and if so whether its ascertainment would involve an amount of work disproportionate to its value, or its publication might be detrimental to the company's business, and thus indirectly to its shareholders and creditors".
It is these considerations which bring me immediately to the Government's proposals for exempt private companies and, in particular, for small family businesses. At present, there are, I believe, about 400,000 exempt private companies. A few of them, as we know, are very large enterprises indeed. But the overwhelming majority are comparatively small. It is to that part of the Bill governing the small family business type of company that I turn first.
In so far as it dealt with close companies, the Finance Bill, which we considered at length yast year, dealt, as we said at the time and as I still believe, a savage blow against many small family businesses. As a result of the Opposition's efforts and also of the public outcry which followed publication of that Bill, the Chancellor of the Exchequer was forced to make a number of major Amendments. But throughout all those debates, both by deed and by word, the Government showed their deep-rooted hostility to the family business operating as a limited company. The House will not be surprised, therefore, when I say that, whatever the merits may be, and without finally prejudging the issues—we shall certainly want to hear a good deal more in Committee about the Government's proposals dealing with exempt private


companies—we on this side look with a certain amount of suspicion at what they are proposing to do under this Bill as regards the small family business.
If it is necessary in order to protect those who trade with small family companies and who extend credit to them, and if it is in the public interest to compel those companies to file information about their affairs, I have no objection, and I wish to make perfectly clear that I am prepared to lend all my support to any public disclosure to the extent that it is necessary for those purposes. But, for reasons which have not been explained to us this afternoon, the Government have decided to go beyond the recommendations of the Jenkins Committee and to enforce disclosure of information contrary to the recommendations of that Committee. This may be right or it may be wrong—it is not an easy matter—but, when the Government are proposing to go considerably further than the Committee's Report suggests—it was published in 1962—I can only say that we are entitled to hear more justification for what they propose to do.
I would remind the House of what the Jenkins Report recommended. It recommended that the distinction between the exempt and the non-exempt private companies should be ended and that in future all limited companies should file their accounts. But it then went on to recommend that, for reasons which it gave, companies whose securities had been neither quoted nor offered to the public should be exempt from the requirement to disclose turnover, rents and directors' emoluments. So that there shall be no misunderstanding, I repeat that I am here concerned, as was the Jenkins Committee, only with those companies whose shares are not quoted on the Stock Exchange—and this covers virtually every small family company in the country.
I would remind the House of the recommendations of the Jenkins Committee in paragraph 352:
We recommend that companies whose securities have been neither quoted nor offered to the public and which are not subsidiaries of companies whose securities have been quoted or offered to the public should be permitted to withhold from accounts filed with the Registrar of Companies…the information now required by section 196 about the directors' emoluments

and
the details of turnover and rents payable and receivable
and so on, as detailed there.
The reasoning behind that recommendation is not far to seek. We are concerned here not with public companies. We are concerned with small incorporated businesses, in the main businesses which are now classed as exempt private companies. Let us consider, first, the requirement that that sort of company should publish its turnover to the rest of the world. In the first place, many of these companies are in direct competition with unincorporated local businesses which have no obligation to disclose turnover. Secondly, many of them are in direct competition with large public companies which even under this Bill will be under no obligation to disclose their results of local trading in the same area where the small exempt private company is in direct competition.
I repeat that, without prejudging the issue, I really think that we are entitled to a much fuller and much more convincing explanation than we have had today, certainly if we on these benches are to give our support to the proposals in the Bill, because, whatever the advantages may be of the proposals in the Bill, the danger on the other side is certainly a real one, and one cannot lightly ignore it.
As for the Government's proposal to make public the director's remuneration in the case of small companies—here again, I repeat, I am dealing only with the small companies—the Jenkins Report was, again, quite unanimous and specific on this point. Therefore, I think that once again we are entitled to more information and explanation from the Government if they wish to have our support on this matter. This is important because it concerns the directors of some 400,000 companies in this country. I should like the House to be aware of precisely what the Jenkins Committee said in paragraph 351:
We recognised, however, that some information required in the accounts, while of interest to the members, was not of prime importance to creditors, and that its public disclosure by some small companies might be embarrassing to them; we had in mind particularly the requirement to disclose directors' emoluments. To meet this, in our opinion, well-founded objection to general disclosure we would give a limited exemption to companies whose securities have been neither


quoted nor offered to the public and which are not subsidiaries of companies whose securities have been quoted or offered to the public. While requiring such companies to circulate full accounts to their members and their debenture holders, we would permit them to exclude from accounts filed with the Registrar of Companies…the information about directors' emoluments now required by section 196".
There we are. I put the hon. Gentleman on notice that we require more information about this, and I hope that the hon. Gentleman who is to reply to the debate will give us some more justification for the proposals in the Bill. I say that because, whatever the legislative difficulties may be, the fact is that there are innumerable differences between the small unquoted company whose activities are primarily—not wholly—a matter of private concern and the large quoted company whose activities are a matter of public concern. In many other countries, Germany for example, there is an entirely separate body of law for each type of concern. The interesting thing is that the courts in this country have time and again said that certain companies are, in effect, little more than incorporated partnerships, to which quite different considerations apply. I am not suggesting for a moment that we should go over to the German system, but what I am saying is that surely there are real differences and they ought to be taken into account. I leave now the case of the exempt private company.
There are three other matters that I want to touch on. First, there is the general requirement concerning directors' emoluments in Clauses 6 and 7. I believe that in our best and most forward looking public companies there will be little serious objection to the provision of some additional information on these matters. But I would ask the Government to consider two points before we come to the Committee stage. First, owing to the multiple employment of individuals in large groups of companies there will be duplication of disclosure arising from the separate requirements imposed on subsidiary and parent companies. For instance, the total of the remuneration of a director of the parent company who is also the chairman of one of the parent's subsidiaries will have to be shown separately in the subsidiary company's accounts and again

indirectly as one of a number falling into the relevant bracket of earnings in the parent company's accounts. I hope that the Government will consider whether there is not something to be said for providing that only the remuneration referable to the employee's position as chairman of the subsidiary company should be separately disclosed in that company's accounts. Otherwise I fear that a very misleading impression will be given.
Secondly, I am sure the hon. Gentleman will agree that in many cases the information provided for in Clause 6 is bound to be meaningless and sometimes misleading. Therefore, I ask the Government to consider allowing companies, as an alternative to the method proposed in the Bill, to publish a statement of the acutal emoluments received by each director during the year. Again, as in Clause 6, the names would not be disclosed. It would be necessary to put this alternative into the Bill because, although companies have power to do it now, they would, in addition, have to provide the information now required in the Bill, unless the Bill were amended, and it would obviously be stupid to provide the two. So I ask the Government to consider that as an alternative.
More and more these days, as the House will realise, directors are also senior executives. This new information, when it comes out in whatever form it finally emerges in the Bill, may well support the survey published only this month which shows that senior executives in Britain are paid less than their counterparts in almost every other major industrialised country. Furthermore, the nearer the top of the management structure a man progresses and the larger the group by which he is employed, the wider the gap tends to be whether the comparison is made before tax or after tax. It will not be inappropriate when these figures are published to bear in mind that, taking into account both increased taxation and the change in purchasing power, the equivalent of a £3,000 a year earned income of a family man in 1938 is now £20,000 a year and the equivalent of a £10,000 a year earned income in 1938 is now £150,000.
I turn now to the requirement that in future companies must publish the value of goods exported by them. That requirement has nothing whatever to do with


company law. I would not rule it out on that account alone, but many of my hon. Friends before this debate began were at a loss to understand the purpose of the requirement and, with all due respect to him, after listening to the Minister of State I am still extremely puzzled.
It is true that in future the Board of Trade will have some information about the export performances of some companies. No doubt the Government want this information for some purpose. The hon. Gentleman said that it was wanted in order to be able to help companies and give them guidance and encouragement to export more. It is, therefore, interesting to note a statement of policy by the President of the Board of Trade, lucked away in a Written Answer in HANSARD less than a year ago. The hon Member for Ebbw Vale (Mr. Michael Foot) asked the President of the Board of Trade
what study he has made of the desirability of the Government acquiring a controlling interest in private companies with a view to expanding exports…
The right hon. Gentleman replied:
In my study of export prospects I have all practical possibilities in mind. The potential for expansion of exports would no doubt be one of the factors which the Government would keep before them in deciding whether to seek to acquire an interest in private companies…"—[OFFICIAL REPORT, 6th May, 1965; Vol. 711, c. 211.]
Whatever may be the reason for the new requirement, the fact is that it will give the Government precisely the sort of information they would need in order to decide, in the right hon. Gentleman's words,
…whether to seek to acquire an interest in private companies…
There are two further points to be made on this new requirement to disclose the size of a company's export figures. First, as the Minister of State recognised, it gives a totally false impression in the case of those companies which do not export directly but supply components to other companies which then export finished products; and it also gives a false impression in the case of those companies which sell their goods abroad through confirming or export houses.
Secondly, I wonder whether the Government have considered the effect of this new requirement on the price levels of our exports. I want to read a

passage from a letter I have received from a company with a very fine export record and one that is well known to the Board of Trade. It will be obvious why I do not disclose its name here. The chairman writes:
We have for years stated the percentage of new orders for export received annually. As I understand it we must now publish the actual increase. Last year, the percentage was 85 per cent. It follows that the overseas buyer will readily be able to determine what our profit figures are on his order. We give him a bargaining weapon against our tendered prices which helps him without doing any good to our shareholders and actually doing harm to our balance of payments.
Here I am not talking about the publication of turnover figures generally but about publication of export figures, and I wonder whether the Government have any idea of the consequences of what they are doing. If the Bill ever sees the light of day in Committee, we may well find that, just as with the Finance Bill last year, it will be left to the Opposition to tell the Government how their new theories will work out in practice.
I have left to the last Clause 16, concerning political contributions. I have done so because, to my mind, this is by no means the most important part of the Bill. But there is no doubt at all, from the time devoted to it by the Minister of State, that to the Government this is the most important Clause.
I have only two things to say about it. First, the requirement has nothing to do with the rest of the Bill or with company legislation. As I have said before, and I repeat my words since the hon. Gentleman seemed to have some doubt as to whether I hold the same view, this Clause has obviously been inserted at the behest of Transport House and if Board of Trade Ministers will stoop to this level of "petty vindictiveness" then those who believe in private enterprise will know how to respond. Secondly, the Government are acting contrary to the clearly expressed conclusion of the Jenkins Committee. Does the hon. Gentleman agree?

Mr. Darling: Yes.

Mr. Barber: In the Report, the Jenkins Committee referred to political contributions and concluded that it did not think they were
…a sufficiently important item in most company accounts to justify an express, general requirement to disclose them.

Mr. Darling: In most companies—not all.

Mr. Barber: The Committee said that it did not think them sufficiently important "in most company accounts". It may have been of some importance in a few companies, therefore. If the hon. Gentleman will read the passage in the Jenkins Report above the one I have quoted, he will find that the Committee came to the conclusion that there is even now, in certain cases, a legal obligation to disclose them. But it also came to the firm conclusion about political contributions that there was no case for a general requirement to disclose them in company accounts.

The Minister without Portfolio (Sir Eric Fletcher): I suggest that the right hon. Gentleman looks at paragraph 51 of the Jenkins Report, which says:
…they raise constitutional issues which are outside our competence…

Mr. Barber: I can reply with ease. The hon. Gentleman should look at paragraph 50 where he will find that the Committee dealt with three points. The first, whether political donations by companies should be permitted, is answered in paragraph 51; the second, whether statutory powers should be conferred on every company making charitable donations, is dealt with in paragraph 52. The third, whether such donations should be shown separately in the accounts, is answered in paragraph 53 and in the following terms:
…we do not think donations are a sufficiently important item in most company accounts to justify an express, general requirement to disclose them.

Sir Eric Fletcher: That concerns charitable donations.

Mr. Darling: Mr. Darling indicated assent.

Mr. Barber: The Minister without Portfolio says that that is concerned with charitable contributions and the Minister of State agrees with him. I knew that this view had been held by some members of the Labour Party so I took the precaution of getting in touch with a member of the Jenkins Committee, who gave the matter his consideration and told me the following day that he was quite clear that the reference in that paragraph was to both political and charitable contributions. I hope that, in the light of that, if the Government have based their legis-

lation on a misunderstanding of the Jenkins Report, they will tell us so.

Mr. A. E. P. Duffy): Mr. A. E. P. Duffy (Colne Valley) rose—

Mr. Barber: No. I cannot give way now.

Mr. Darling: Surely the right hon. Gentleman is putting forward a proposition that is not in the Jenkins Report. Paragraph 50 is divided into three parts, as he said—political donations, charitable donations and whether such donations—that is both—should be shown separately. Paragraph 53 reads:
It has been suggested that donations"—
not political donations but all kinds of donations—
should be shown, in aggregate, in company accounts…
and goes on to deal with—

Mr. Barber: —political and charitable donations, and says that neither should be disclosed. I am not arguing the merits of the case but simply making the point that the Jenkins Committee says clearly that in neither case should there be a general requirement to disclose them.

Mr. Darling: The right hon. Gentleman is leaving out paragraph 51 which says:
We do not comment on the substance of these suggestions"—
dealing with political funds—
because we are quite clear that they are not primarily a matter of company law and that they raise constitutional issues which are outside our competence…

Mr. Barber: They were referring—[Interruption.] If hon. Members cannot take it—

Mr. Robert Sheldon: Mr. Robert Sheldon (Ashton-under-Lyne) rose—

Mr. Barber: No.

Mr. Sheldon: Mr. Sheldon rose—

Mr. Deputy Speaker (Sir Samuel Storey): The hon. Gentleman must not persist.

Mr. Barber: All I am saying to the House is that, having consulted a member of the Jenkins Committee—[HON. MEMBERS: "Who?"] The Minister without Portfolio can reply to this tonight if he


likes. Having consulted a member of the Jenkins Committee, I have his authority for saying, after considering—

Sir Eric Fletcher: Sir Eric Fletcher rose—

Mr. Barber: No. I have given way time and again.

Sir Eric Fletcher: Sir Eric Fletcher rose—

Mr. Deputy Speaker: The hon. Gentleman must not persist.

Sir Eric Fletcher: This is a very serious matter. To say the least—and I do not admit this—there must be an ambiguity in the terms of the Jenkins Report or the right hon. Gentleman would not have thought it necessary to consult a member of the Committee to ascertain his interpretation. In view of this, I want the right hon. Gentleman to tell us whether it was the Chairman he consulted, or a member of the Committee, and whether he consulted one or more than one.

Mr. Barber: I repeat what I said: I had heard that this was the view taken by some members of the Labour Party and I therefore wanted to assure myself of what the true position was, and so I consulted a member of the Jenkins Committee who advised me as I have told the House. Furthermore, he gave me authority—

Mr. Ted Leadbitter: On a point of order. Is it not a fact that when evidence is given or statements are made from documents those documents have to be named? Similarly, is it not proper that when such a statement from persons outside the House is made those persons should be named?

Mr. Deputy Speaker: That does not apply to the present position.

Mr. Barber: Like the Minister of State, I have been able to deal with only some of the aspects of the Bill which have attracted particular attention since it was published. There is a wealth of detail—[Interruption.]

Mr. Deputy Speaker: Order. The hon. Member for Colne Valley (Mr. Duffy) must not persist in making comments while he is sitting down.

Mr. Barber: There is a wealth of detail, some of it mentioned by the hon. Gentleman, which we shall have to

examine in Committee, and I do not doubt that we shall seek to add certain provisions. If the Minister of State is to be in charge of the Bill, I have no doubt also that the Committee stage will be a very agreeable one. Meanwhile, in the hope that we can amend the Bill in furtherance of its principal purpose of serving the investor and contributing to efficiency, we will give our support to it.

4.53 p.m.

Mr. Peter Shore: The right hon. Member for Altrincham and Sale (Mr. Barber) did not seem to be at his best today. He seemed to be relying rather too strongly on the arguments of authority, as it were, and the authority in this case, the Jenkins Committee, turned out not to be the whole Committee but one member of it. As the Jenkins Committee consisted of a number of rather diverse personalities and was appointed by one of the right hon. Gentlemen's predecessors, I do not think that he should have rested quite so much weight on that point of view.
He was a little unnecessarily tart with my hon. Friend when he said that he did not think that we would find the time to legislate on company matters. That came very ill from him. I have not lived a very long time, but in the whole of my political life I can recall only two Companies Bills of any substance, both coming from Labour Governments. The first was the Companies Act, 1948, which was the first for very many years, and then we had to wait all those long and wasted years, of which we have heard so much, until we had another Labour Government and a second serious Companies Bill now before the House. It was not very apt of the right hon. Gentleman to accuse us of not doing enough and of not finding time to consider company matters.
Personally, I welcome the Bill. I have read it with considerable satisfaction and I think that it will tear away the veils of secrecy which have unnecessarily surrounded company activities in a number of important directions. We have heard—and in this connection I have some slight sympathy for what the right hon. Gentleman said—that in future the exempt private company will have to make full returns. I think that I am in


favour of this, although I would like to hear rather more arguments in favour of this proposition. Certainly no one should imagine that this will not be an immense clerical job. Although my figures do not quite reach 400,000, there are at least 300,000 exempt private companies which will now have this obligation placed upon them, and someone has to register and collate all this information.
However, I think that there is always a case for, in some way, differentiating between the obligations which one is prepared to impose on the smaller family company and the obligations in terms of accountability which one should impose on the large public company, the large corporation. That apart, the veils are being partially lifted on banking activities, which is certainly to be welcomed, and they are being lifted from emoluments at the top of British industry, something which I have felt strongly about, and we are also to have more information about political contributions.
I want to begin my comments by putting to myself the question: what it is that we want this information for? Why is it basically that we are interested in and welcome and are well disposed towards greater disclosure of more information? I am sure that there are different answers to the question, but my answer is that there is a tremendous community interest in what business does and what companies do. That interest can be regarded in a number of different ways. But along with that proposition, that there is great community interest in what companies are doing, goes a second proposition which is finding increasing acceptance in the country and on both sides of the House.
It is that especially the large modern enterprises in Britain and other Western European societies do not conform to the rules and the laws of private enterprise as it used to be and as it has been classically and theoretically described. They are differences in behaviour which can be attributed to many changes and factors at work, but briefly they can be summarised by saying that there is no serious accountability to shareholders in large corporations, not only in Britain but anywhere in the Western world. This arises out of fragmentation in share-

holdings and other factors with which we are all familiar.
Secondly, in the very large corporations there are not the compulsions of the market mechanism to force correct allocation of resources and a high degree of competitiveness and so on which in the past were supposed to lead to the optimum use of resources. Because of the great size and, secondly, because of the lack of shareholder control, growing up in these big corporations there is a kind of managerial élite which is largely self-regulating and which has very great power. It is this power, which now affects the community in so many different ways, that we have to turn our attention to, and the greater provisions for disclosure should be judged in relation to this phenomenon of the large corporation.

Sir Tatton Brinton: I am most interested in what the hon. Gentleman is saying, and there is a great deal of truth in what he says. However, when he speaks of this elite governing the very large corporations almost independently, would he say that that is true of the majority, by number, even of the public companies, most of whom are small or medium-sized?

Mr. Shore: I would agree with the hon. Gentleman, and this would be the basis for my own distinction, which I mentioned earlier, between the amount of accountability imposed upon different companies. Where one has a large company which is divorced managerially and directorially from its shareholders, one requires a far greater accountability than there has been in the past. However, where there is a more genuinely small family business I do not feel so very concerned.
What follows from this sort of self-regulatory control by managers in these large corporations? The first thing mat does not follow is that one can leave things as they are. There was a very famous remark made some years ago in the United States of America by a senior executive to the effect that:
What is good for General Motors is good for America".
Behind that lay the assumption that one is simply not interested in what large corporations do; one simply leaves them alone to get on with the job. I do not think that anyone would seek to apply that to Britain. What is so obviously


true about large corporations in Britain—anyone who studies economic affairs is forced to this conclusion—is that when things are good for large companies it generally coincides with things being frightfully bad for the country. I am not arguing this as a major criticism, I am simply pointing out that during periods in the British economy when large corporations are expanding and doing very well, when profits are high and they the investing, the country seems to get into serious problems to do with the balance of payments or elsewhere.
I do not think that anyone would seriously contest this, and it is because one gets the difference between what appears to be for the corporate good and what is not for the national good that one has to be concerned with many more aspects of corporate affairs than we have been formerly.
This takes me straight to the point on which my hon. Friends were challenged, the point about export figures. Of course export figures matter. They are enormously important. If one does not know how large a proportion is being exported it is very difficult, not to do the rather absurd things which the right hon. Gentleman suggested we might do, but to fashion a policy at all in order to encourage exports and to get the improvement in our balance of payments which we so clearly need.
I am strongly in favour of these provisions for finding out and getting more information about export performance. The same thing applies to the earnings on different assets. Unless we can make companies self-conscious about their performance there is a tendency for them, as long as they are doing reasonably well overall, with large diversified interests, not to worry too much about the particular and separate businesses they are conducting. The more we can get information on this and the more this information is made public, the greater the forces of self-criticism, as well as outside criticism, will be operating within this large corporate sector.

Mr. J. Bruce-Gardyne: I heard the hon. Gentleman say that we needed a yardstick of earnings on assets. I am very much in sympathy with this, but surely there is nothing in this Bill to provide for the revaluation of assets and, without the sound provision for the

revaluation of assets, one has no meaningful yardstick supplied.

Mr. Shore: I am not absolutely certain whether the hon. Gentleman is right on this. If he is, then this is a point at which I should have thought my hon. Friends would look sympathetically during the Committee stage. I do not disagree with the general point he is making.
I would like to deal with other aspects of greater disclosure. First of all there is the disclosure of rewards. This is part of, and ought to be considered as such, an attempt to make British industry more efficient. I have never understood the shyness about revealing what people are getting. Here again I am certain that as this information becomes available, as we know what different companies are paying at top level, we shall come, if not through external pressures and information, then to some extent because of the active self-criticism going on within the corporate sector, to get a much more sensible adjustment of the top salary structure which is today shrouded in secrecy and has never been subject to any serious or rational consideration. I have made one or two proposals about this in the past and I will not now go into them.
What always seems to me to make the disclosure of rewards very important is that when one is dealing with this particular group of people one is dealing with people whose rewards are largely self determined. This is very different from the position of most people running public corporations, or in almost any other walk of life. There is, therefore, a particular obligation to disclose. Why we cannot emulate the United States in this respect and go a little further, as it has been doing quite successfully for the past 30 years, and provide for the disclosure of directors' awards and the awards of a band of top executives over a certain salary limit, I do not know. I should have thought that this would be sensible.
The last point I want to touch upon is the somewhat controversial Clause, judging from what the right hon. Gentleman opposite had to say, dealing with the political contributions. This is important, and I do not think that it is just a party political point. It is an important point for British democracy. We are not dealing


with tiny sums of money, we are dealing with enormous financial powers. I am not saying that the potentiality of this financial power has been realised in the last few years in English political life. Heaven forbid! What is available, what could be poured into political purposes, is almost unlimited. I am convinced that the very first step is to get an adequate disclosure of what is being paid in.
Before I came to the House this afternoon I looked at the amount spent on the last General Election, given by Butler and King in their Nuffield study of the last General Election. The point that I am making, that we are dealing with substational sums, can be very easily substantiated there. In the year before the last election the Conservative Party spent £750,000 on advertising, on posters and in the Press. During the same year, Aims of Industry, which is known to be somewhat sympathetic to the Conservative Party in it views, spent £370,000. The steel companies spent £1¼ million on anti-Labour advertising, and the Economic League spent over £250,000.
The only group which in the past has figured in these campaigns and sat it out last year was the Institute of Directors. I quote from Butler and King as to its motives. It was felt that:
…a campaign by directors on behalf of the Conservatives might be misinterpreted by the electorate".
I can understand that.

Mr. William Clark: The hon. Gentleman has no doubt made a slip of the tongue. All of these moneys he is speaking about were not anti-Labour but anti-nationalisation. Is the hon. Gentleman saying that private enterprise should not use its own money in order to protect its own interests?

Mr. Shore: I cannot agree with that. To some extent some of the steel campaigns were deliberately anti-nationalisation, but the great majority of the campaigns were anti-public intervention in almost any form. I mean this quite seriously. If one looks at the slogans and the literature issued, then it will be very easy to substantiate the point. Because this is a very important development in British politics in recent years I have no doubt that the first thing we should do is to insist that there should be ade-

quate disclosure of what has been paid, and to whom these sums are being paid. I am a bit worried about the way in which this Clause is framed. I am not sure that it will be effective enough. I look particularly at Clause 16(3,b) which deals with donations or subscriptions
to a person who, to its knowledge, is carrying on, or proposing to carry on, any activities which can…reasonably be regarded as likely to affect public support for such a political party…".
This is very vague. I think I know what is in the Government's mind. They are trying to deal with all the front organisations which have helped the Conservative Party in the past. But we must have clarification of the position of such bodies as British United Industrialists, which we know was set up by the Conservative Party many years ago as a means of collecting money from firms and channelling it to headquarters. How is this concern affected by the Bill? How would Aims of Industry and other bodies feature in this Clause?

Mr. A. E. Cooper (Ilford, South): Mr. A. E. Cooper (Ilford, South) rose—

Mr. Shore: No. I have given way too much, and I do not want to detain the House for more than another minute or so.
I am not sure whether we are thinking broadly enough about the disclosure of political grants. It is a mistake to single out political donations. I am more interested in corporate donations as a whole. The important thing which we must remember is that we are not dealing with individuals allocating their own money. We are dealing with managers of corporate property disposing of other people's wealth. There is an obligation to have much more ample disclosure of what is done with this wealth. I should like to see a real statement of corporate donations attached each year to the annual report. I do not want to suggest all the subheads, but it should cover donations to charity, education, research and many other things. I would certainly include politics, which would naturally find its proper place in this general and rather enlarged provision for disclosure.
I welcome the Bill. I accept what my hon. Friend the Minister of State said about this being the first instalment. With many of our major institutions, it would


be wrong to imagine that all the problems can be put right or that we can achieve what we want to achieve in a single Measure. We are in for a long and sustained period of institutional reform. I welcome the Bill, finally, for the reason that by insisting on greater disclosure, which ultimately means greater accountability, we are tending to do something which is certainly very necessary: we are tending to close the gap between the obligations which have so far been imposed on the public sector as opposed to the private sector. The more these two sectors are brought together, the better it will be for British industry.

5.14 p.m.

Sir John Vaughan-Morgan: The hon. Member for Stepney (Mr. Shore) began his speech by referring to the Companies Act, 1948, which was introduced by a Socialist Government. I should have thought that we would all agree that that was a great, monumental Act based on the Report of the Cohen Committee. The hon. Gentleman must have been the more ashamed of this puny and inadequate little Measure which has been brought forward by his party simply and solely for the one political reason which emerged so plainly from the speech of the Minister of State.
I should like to echo my sympathy to the right hon. Member for Battersea, North (Mr. Jay) for not being here today. It is a shame for him that he should be deprived of the place in the sun for his Department which has for so long been overshadowed by the Department for Economic Affairs. I hope that at a later stage he will be able to join us and take part in the long debates which no doubt there will be on the Committee stage of the Bill.
We had an extraordinary offer from the Minister of State. He said, more or less, "We know that the Bill is inadequate, but if you co-operate with us we will try to make it better. We will make it a nice, long Bill if you will help us fill in all the inadequacies and lacunae left by our proposals." We should welcome that, and no doubt those of us who serve on the Committee will co-operate. By the time that it returns to the House from upstairs it will be a very different Bill from the thin, inadequate one which we have today. How fortunate it is that the Long

Title is so short that it will enable us to do much useful work.
We can welcome much of what is in the Bill, but an obvious sign of its inadequacy is that, for example, in the matter of half-yearly accounts the Board of Trade falls short even of the requirements of the Stock Exchange. The Minister of State should have given a little more credit to the Stock Exchange for being so much more radical than his Department and for doing so much to re-establish the rights of the disinherited equity owner in the large public company. I agree with the hon. Member for Stepney that in the case of the large quoted public companies direction is far too divorced from ownership. I think that the hon. Gentleman exaggerated the dangers of the "ingrowing élite", but direction separated from ownership results sometimes in a lack of sensitivity about the correct and most profitable course for a company. It is far too easily assumed that the interests of directors, managers and shareholders always coincide.
We must, therefore, welcome the fact that by the Bill some additional information will be afforded which has long been denied to shareholders. It will now be much easier for them not only to estimate the profitability of the company in which they have invested money but to judge the efficiency of the board. There has been far too much secrecy in many companies, far too much building up of shareholdings in other companies, without an apparent motive or regard to profitability. Sometimes ventures are launched without accounting to the shareholders for profitability, whether it is to be immediate or ultimate. Losses can be concealed, and so can monopoly situations. These are all matters to which we shall be able to give detailed consideration in Committee.
I turn to Clause 16 to which, as my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) said, the Minister of State devoted more than half his speech and which was the only portion which aroused any enthusiasm from his supporters. I hope that the Minister without Portfolio, when he replies, will give us an assurance that, in the hands of Governments and corporations, there will be some protection against prejudice in the placing of contracts or in the policies which may be


pursued because of political contributions. This is very important, perhaps much more important than people realise. It has been known to happen elsewhere. Why bring this Clause in merely for political contributions, except because of bias and prejudice? Why has it not been extended to all gifts to outside bodies?
The Minister of State went through a long list of the activities of the Oxford Co-operative Society. He told us of its inadequate contribution to the Co-operative Party, and he gave a long list of contributions to such bodies as the Oxford Preservation Trust and Oxfam. But why extol that in a co-operative society and not in companies?
There is a case for some patronage to be exercised by companies, but the amount of patronage should be known to the shareholders. It should be shown to pertain to the purposes or interests of the company, just as contributions to political or quasi-political bodies should be shown to be in the interests of that company. A company which I know of was making a political contribution and mentioned the fact. I understand that it had a letter from a shareholder saying that the sum concerned was grossly inadequate.
If the purpose of the Clause is to give more information and protection to investors, which has not yet been proved, it must be extended to all other gifts and donations.

Mr. Edmund Dell: I would like to understand what the right hon. Gentleman is saying. Is he saying that if the Clause were extended to other forms of subscriptions such as those that my hon. Friend the Member for Stepney (Mr. Shore) mentioned, he would then support a Clause requiring revelation of political subscriptions?

Sir J. Vaughan-Morgan: Obviously we would have to see the form that it took, and it is not acceptable in its present form.
I turn now to Clause 6, which deals with directors' emoluments. I can see no objection to the proposal in the case of quoted companies, but there must be a complete exemption for companies with assets of less than a certain size, and particularly there must be exemption for small private companies. As Jenkins

says, I can see that it could be very dangerous, utterly misleading to competitors, and would lead to take-over bids and so forth, which would be thoroughly unwise. Apart from that, I have never understood the need for anonymity in this sphere. We have always accepted that there should be publicity in the case of the Civil Service and the Armed Forces. Many a civil servant's wife must be grateful to Whitaker's Almanack which enables her to see that she gets a fair share of her husband's income for the housekeeping. I see no reason why a large public corporation should be any different. Certainly it is the practice in the United States of America, and it might help us to move into the same kind of high earnings, high salary economy that they have and, perhaps, ultimately get away from the corrupting, niggling spirit of envy that exists here.
I agree with the Minister of State that we may find some surprises. We shall find that a few are overpaid but that many more are underpaid, and that the gap between the different incomes is probably not as great as it should be.
By the same token, I did not understand the Minister of State's argument for not extending the Clause to all directors. Why pick on the chairman, who is elected by the board, and not on the directors, who are elected by the shareholders? All that it is proposed is to classify them by bands. The hon. Gentleman said that it would be very awkward in the case of the outsider who is brought in at a special salary. But we are going to have a new occupation which will be called "band spotting". It will be quite possible to work out from the changes as between one year and the next who is the outsider—who is this Beeching who has been brought in.
It is one of the feeblest arguments for anonymity that I have ever heard. There might be a case for lumping all the directors' salaries together and segregating the chairman, but the Minister of State ought to be able to cook up a better argument than that. The one example that he cited defeated the argument of anonymity. I hope that he will be able to do better.
There is also a strong argument for showing fees and salaries and other emoluments in quite separate categories.


There are some other very strange omissions. I would like to see all directors' transactions in shares specified. I find it a disgraceful omission from the Bill which justifies all the castigation it has received. Equally, of course, there should be details of all directors' service contracts. The fact that such obvious points have been omitted shows how badly and hurriedly the Bill has been drawn up.
Then there is the curious feature of specifying the export business. The reasons given by the hon. Member for Stepney were characteristic of the very muddled outlook of the party opposite. I do not believe that it is necessary, just or wise.
I come from a firm which has a unique and remarkable record in exports, and it has had it for over a hundred years. We never hesitate to boast about it. If he had been here, the Minister of State would have given us a good reference, but I should be very unhappy if we were always compelled to show the share of exports that we had achieved, particularly if it was extended, as it will be, to showing it by groups of products. There are elements of great danger. I am not saying that the figure should not if necessary be made available to the Board of Trade, but the question of general publication is going to put it in a quite different category. If it is a question of prestige, a firm will boast of its export record, anyway.
I agree very much with the Minister of State that we have to move on from exhortations. My hon. Friend the Member for Sevenoaks (Sir J. Rodgers) and I have both done our stint of exhortation. I always felt a little embarrassed in going to people and telling them how much more they ought to export, when they knew far more about it than I could do.
The Bill, by this publicity, penalises unfairly those firms which make component parts or process raw materials, because they may be stigmatised as not doing their bit for the country. It may make invidious distinctions between firms who export directly and those who sell abroad indirectly through merchants or confirming houses. If exporting is creditable and to be made accountable, is importing to be made discreditable and equally accountable? Are firms going to be asked to disclose the volume of their imports? Then, after all, what has it

proved? One cannot lay down any generalisation from Whitehall about whether a firm should or should not be doing better. If these figures are published, I think that the Government will soon have representations made to them of various natures which will show the harm that it could do to our export interests.
In his speech, my right hon. Friend the Member for Altrincham and Sale gave a list of the omissions, and I have no doubt that others of my hon. Friends will extend that considerable list. So far, a great opportunity has been missed of introducing the Bill which is needed. As it stands, it is puny and petty, and quite clearly it is prejudiced.

5.30 p.m.

Mr. Robert Sheldon: The right hon. Member for Reigate (Sir J. Vaughan-Morgan) favoured greater disclosure of donations and share dealings of directors. I think we have all begun to feel that there is some substance in this, and I wonder why he and his hon. and right hon. Friends have not taken rather more notice of the invitation of my hon. Friend the Minister of State to offer their assistance in getting through a Bill with these fuller measures.
The Bill before us represents a pleasing alliance between those who desire disclosure for the protection of shareholders and investors and those who want disclosure for economic progress. This is an excellent alliance and I hope that it will prosper also in Committee. I welcome the Bill because I consider it one further Measure by which the Government are helping industry to greater efficiency. I favour this general drawing closer together of industry and Government, and I consider that some of those countries with the most impressive record of economic growth have shown this closer working.
It is becoming increasingly accepted that the purpose of a company is not only to make profits. Its present functions are more numerous and the obligations it has are more complex. As we know, it has responsibilities to its employees, to the community and to its customers, as well as to its suppliers. Even the Institute of Directors has stated:
Directors' responsibilities extend to the company, its shareholders, its employees,


customers and creditors, and, in some degree, the State.
Some of these wider responsibilities of the company find little expression in the Bill. I do not think that that is the fault of the Bill. The new ideas which have been current for only a short time have not yet resulted in the detailed discussion and argument which are essential preliminaries to legislation, but many firms to an increasing extent tacitly accept much wider responsibilities.
Long before the passing of the Monopolies and Mergers Act, monopolies did not always obtain the maximum profit which their position could have forced the market to accept. Many firms participate extensively in local organisations; not all welfare benefits which progressive firms offer may be attributed entirely to their desire for industrial peace and good will. Company law, I believe, will eventually have to take into account these wider responsibilities, whether by way of broadening the board to include such interests—what Michael Fogarty has called "participative management"—or possibly, by considering two-tier boards as there are in Western Germany.
These forms of boards of directors could permit the advisory functions which, separate from the executive, could result in a company rather more in line with what we feel to be the wider interests of the organisation. Public discussion will have to take place before such changes can be expressed in legislation. Meanwhile we have a Bill, rather more limited, to deal with the urgent problems which are under more detailed discussion.
The most important purpose of the Bill is to provide for the greater disclosure of information, the purpose of which is to improve economic efficiency. I would summarise the Bill as one which provides disclosure for economic efficiency. I would take my stand on disclosure and I consider that it is up to those who wish to conceal any facts about the working of the company to state their case. That would be one of the answers to the arguments of the right hon. Member for Altrincham and Sale (Mr. Barber) when he sought to find out the views of the Government on one or two matters. My

stand is on disclosures: those who want secrecy must justify themselves.
There are firms today which disclose so little that even the nature of their business is concealed. Undoubtedly, there are certain firms which benefit from such secrecy. The Bill does not necessarily set out to assist each individual company, but any harm caused to a company by these measures must be set off against the benefit to companies as a whole. Disclosures may damage certain firms, but the damage will come from their competitors and industry as a whole will benefit. Those firms which wish to maintain secrecy are allowed, by Clause 2, to re-register.
The case for the Bill largely rests on its case for disclosure. First, disclosure permits outsiders to make detailed and informed comment and criticism on the running of the company. Such outsiders will effectively be able to challenge decisions of the company more easily and keep directors on their toes. Outsiders who will be able to make separate assessments of the work of the company might be investors, competitors, take-over bidders or even the I.R.C.
Second, disclosures will give to creditors the surely reasonable right of certain information about the security of their credit. At present, unlimited companies—whether partnerships or individuals—stake the whole of their personal capital on their success. At present, the exempt liability companies risk only their share capital. It cannot, surely, be wrong, in return for this privilege, to provide the information requested.
Third, disclosures of export figures provide only a limited encouragement to export and too much should not be expected from this. But there should be some inducement, if only, possibly, that of a sense of shame or even of comparison with other companies who might be putting up a better performance.
Fourth, disclosure can be useful to investors: comparisons between firms can become much more meaningful and investors can decide where they should put their money.
Fifth, disclosures can provide incentives to success. Fewer excuses will be possible and efficiency of management can be increased because there will be information


available from which to make meaningful comparisons.
Sixth, disclosures can assist in general government economic planning, to improve its accuracy, with benefits to the whole of industry.
Clause 6 of the Bill has a rather complex arrangement showing bands of emoluments of directors to be disclosed. The purpose of ranges of income rather than actual amounts is obviously to avoid too close an identification between directors and their emoluments. The right hon. Member for Altrincham and Sale was in favour of further disclosures, as was the right hon. Member for Reigate. I would go further than that. I should like to see the precise emoluments set out, although I would concede that it is not necessary to name the directors.
I believe that this coyness beloved by industry is unnecessary today. The incomes of those responsible for the running of industry should not be so secret. The incomes of civil servants, hon. Members and local government officers are all disclosed, and there is no reason why directors of industry should not reveal theirs as well. If they are worth what they earn, they ought not to apologise. If industry provides the wealth of the country, it is in the interests of us all that certain of these rewards should be high and should be known. If the pay is high, it should then be justified. If the rewards are wrong, disclosure can awaken public interest and put this right. But the secrecy which shrouds the earnings of directors is only a convention and should be recognised as such.
Clause 15 of the Bill deals with the disclosure of turnover and the methods by which this turnover is arrived at. Its proportion amongst classes is also revealed and the extent to which each class is profitable. The disclosure of profit and turnover might be of marginal disadvantage to the young firm, although such a small firm is rarely a threat to many people at that stage.
In dealing with the disclosures of the emoluments and turnover of the small firm, the right hon. Member for Altrincham and Sale quoted the Jenkins Report in support. But in paragraph 351 the only support which I find is that these disclosures "might be embarrassing". This is obviously not a reasoned

argument. This is a view. The Government have taken another view, and I think that the Government are right.
What is most important is that disclosures of profit and turnover can be a spur to competitiveness. New ideas may be copied because of the profitability so revealed. But the new ideas have two or three years start, and efficiency can be a very useful test after that. There are certain similarities between the secrecy behind which firms shelter certain profitable lines which they are exploiting and the patent laws which allow time for profits to be made from inventions. It is the aim of patent law to provide very substantial incentives for new inventions, and it might also be held that secrecy provides incentives for new ideas which are not patentable. That patent law is an incentive is undeniable, but in many cases it creates a monopoly and a bonanza well in excess of the principle involved. But the person does create the invention for the reward. On the other hand, few have knowledge at the birth of a new idea as to the ability to maintain secrecy for very long. This is part of the detailed consequences, which cannot be foreseen, an unexpected bonus which cannot be anticipated, and therefore this secrecy does not act as an incentive to new ideas.
The best ideas, the best records of innovation, belong to the competitive firms. It is the competitive firm which usually comes out with the best ideas. I think that there is some connection here and that competition generally stimulates new ideas, and it is the stimulation of new ideas under competition which we should encourage.
Clause 17 of the Bill deals with disclosures of the value of exports. It is undeniably an incentive to make certain companies feel possibly a little ashamed by showing that their competitors export more. The manufacturer who sells to other firms which export is not himself exporting and is not making the export effort. Where certain co-ordinated ventures are in force, notes can be appended to the accounts. What is crucial about exporting is the export effort, and selling a component to another organisation is not an export effort.
One of the most important ways of helping in the testing of efficiency comes


under paragraph 3 of Schedule I, which deals with the valuation of assets, the details of the person or persons who valued them and their qualifications. This, I think, removes one of the most misleading parts of the balance sheet. One of the most important tests of efficiency is the rate of return on the capital employed, and if the valuation of the assets is not determined accurately this test of efficiency is meaningless.

Sir T. Brinton: I believe that the hon. Member has considerable knowledge of accountancy, probably more than I have, and I should like to know whether he intends to tell the House that it is possible accurately and effectively to value assets, particularly where they are of some considerable antiquity. If he knows of a method, I should be most grateful to hear of it for the purpose of my own business.

Mr. Sheldon: In referring to me as an accountant the hon. Member assumes that I have a knowledge which I do not possess. I am not an accountant.
But I am certain that the valuation which is asked for is much more than is at present obtainable. Asking for a valuation, the date of the valuation and the names and qualifications of those who value the asset provides much more than we have had before. It is not perfect. One approaches perfection, I am afraid, only by slow degrees.
Paragraph 12 of Schedule 1 deals with the amount of interest on loans. It is a pity that the rate of interest itself is not mentioned, but obviously that would create great difficulties. This, again, I feel is a further test of efficiency in disclosing how much the company has to pay for loans. In many cases it might suggest the advisability of higher gearing. I am sure that my hon. Friend the Member for Heywood and Royton (Mr. Barnett) will have something to say about that. But these informed comments on the running of the company only become possible to the outsider as a result of the Bill.
I hope that other hon. Members, too, would like to see the notification of directors' share transactions, the notification of nominee holdings, both recommended in the Jenkins Report, the prohibition of non-voting shares, the first

note of dissent in the Jenkins Report, and the abolition of the exemption of banks and discount houses from the filing of accounts. This is covered partly by the Bill and I note the further discussions which the Board of Trade will be having.
Most important, I regard the Bill as a further measure by the Government to promote efficiency. I believe that the more public discussion there is about the realities of companies the easier will the Government find it to place themselves in a position to assist industry and generally to create favourable conditions for economic growth.

5.47 p.m.

Sir John Rodgers: Like my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan), I am very sorry that the President of the Board of Trade is indisposed and not with us today to discuss a Measure which should have been entirely non-political but which, alas, owing to the pettiness of the Government, cannot entirely be so. I hope that the President of the Board of Trade will soon be cured of his indisposition and will be with us again so that he may get a little of the limelight which too often has been stolen by the Chancellor of the Exchequer or by the First Secretary of State when it has not been directed at the Prime Minister.
All of us, on both sides of the House, favour the fullest disclosure of information possible of the operation of companies, to encourage the most efficient operation, to allow one firm to have a yardstick against the operation of another and also in the interests of the protection of the shareholders. Anything in the Bill along those lines is obviously to be welcomed on all sides of the House, and I am sure that it will receive friendly co-operation in Committee.
I refer especially to the protection of the shareholders. I agree very much with the hon. Member for Stepney (Mr. Shore) that at present the shareholder in the large company has very inadequate information and very little say in the operation of the company. Perhaps that is inevitable. But we should provide the widest possible information to shareholders, particularly where we are attempting on both sides of the House to encourage more and more people to invest in British industry. We ought to


regard the fullest disclosure of information as worthwhile not only for the protection of shareholders but also for the efficient operation of British business. A good deal more information could be given, as we have seen from the operation of American companies. On the whole they operate in a free enterprise climate, and yet they find it possible to give a great deal more information than do many of our companies. I am on the side of major disclosure wherever that is possible.
Having studied the Bill I feel that I have never before seen what is called a major trade Bill so full of the sins of omission and of commission. It could be described as attempting to do those things which ought not to be done and omitting those things which ought to be done. Many hon. Members have illustrated the things which should have been included in a Bill of this sort. My right hon. Friend the Member for Altrincham and Sale (Mr. Barber) pointed out that it is 18 years since the law relating to companies was last revised—[Interruption.] If hon. Gentlemen opposite want to know what my party did about this, they should remember that we set up the Jenkins Committee.
I regret the omission of certain matters from the Bill, one of the most important being the omission of provisions covering the issue of shares of no par value. Secondly, I regret that the Government do not go as far as even the Stock Exchange—which hon. Gentlemen opposite occasionally attack—in asking for interim reports from companies, remembering that these would be beneficial to the operation of companies. Thirdly, I believe—and I speak personally and not for my hon. Friends—that the Government should have made it obligatory to disclose the identity of nominee shareholders. That would have been a major step forward. Fourthly, perhaps most important of all, there should be the disclosure of directors' share dealings during the year.
All these matters are more important than those in the Bill. All are omitted for the apparently ridiculous reasons advanced by the Minister of State. I hope that, in Committee, there will be an attempt to table reasoned Amendments covering these points. In Committee we can go into these matters in more detail.

In the meantime, I will comment on only a few points in the Bill, the disclosure of export figures being a matter of prime importance.
From my experience of dealings with the Board of Trade I have taken the view that that Department is inadequately supplied with figures of exports from British industry. I do not believe that the Bill is the place where such figures should be sought or that such statistics should be given publicly. By all means let them be supplied to the Board of Trade, and I am sure that there would be no difficulty in doing that, but they should not be so public that the whole world will be able to see them—including not only a firm's competitiors in the home market but companies overseas. I trust that the Government will think again on this issue.
It is obvious that the export figures at present available to the Board of Trade are meaningless. Many people appreciate this. One need only consider, for example, the motor car. Practically the whole vehicle represents an essembly job. The production is made up of the assembly of component parts, none of which would individually be shown in terms of export figures. The Minister admitted that, but he did not say what would be done about it. Properly collected throughout industry, the figures of exports would be valuable.
I was tempted to say, having carefully read the Bill a few times, that it had been drafted by civil servants for civil servants. However, it would be wrong of me to say that, because I have a greater admiration for civil servants than to make a remark of that sort. However, I believe that it has been drafted at the behest of Left-wing politicians to satisfy Transport House. It is also steered by people who know very little about industry. If that were not the case, why have the Government picked on the chairman of a company to disclose his emoluments by name only? I know of many companies where the chairman is only the front figure, so to speak, earning very little salary and having virtually no control at all. I know of other companies where the deputy chairman is the most important personality with most control, and of yet other companies where the managing director is the person in charge. Why on earth the Government have picked out this one man I do not know.


It shows a total lack of real knowledge of how British industry is constituted and operates.

Mr. Darling: It shows that the hon. Gentleman did not listen to my speech. I covered all the points he is making.

Sir J. Rodgers: I will read the Minister's speech in tomorrow's OFFICIAL REPORT. I have no recollection of him dealing with this point. If he did, he must have done so in an extraordinarily mumbled way.
I will concentrate the remainder of my remarks on two important points; first, the abolition of the exempt private company and, secondly, the disclosure of contributions for political purposes, about which the Minister spoke at considerable length. On the first point—the exempt private company—there may be good reasons why there should be disclosure of the affairs of large companies—large exempt private companies such as Pilkington, Littlewood's Pools and firms of that size—but what earthly reason can there be for extending this to small local companies? It may interest hon. Gentlemen opposite to know that one of my local newspapers, the Seven-oaks Chronicle, did a survey last week among smaller private companies in the Westerham area. All the companies stated that they had no objection to the publication and filing of company accounts. Since they are all audited they had no objection to that being done. This point was covered by the Jenkins Report. However, they all objected to the publication of details of turnover, salaries and so on. Without knowledge of the remarks made by the other companies, each of them pointed out that the publication of such details would make them vulnerable to take-over by other companies, particularly firms operating in the retail sphere.
There must be a place in our economy for the smaller company. It is on the smaller enterprise that a great many of our great industrial empires have been built, and I am sure that hon. Gentlemen opposite agree that we should do something to encourage the small family firm. I urge the Minister without Portfolio to accept that these small firms will be the minnows which will be caught in a net which is intended for the big fellows. That being so, should we not

look again in Committee at this whole matter and consider exempting these companies?
If it is held that there are good reasons for the abolition of the status of exempt private companies, there must be a compromise. Could not such a compromise, for example, be where companies have net tangible assets of less than, say, £100,000? Could they not then be exempt from filing accounts? A definition of "net tangible assets" would have to be achieved to prevent companies from keeping artificially low assets. Perhaps we could consider this in Committee. However, if that is not acceptable, why not exempt companies which are not quoted on the Stock Exchange, which would be another way to get round this difficulty?
I know that a number of small companies in the Westerham area are extremely worried about what they will have to do under the Bill and nearly all of them will be seeking legal and financial advice to see whether it would not be best for them to take advantage of the unscrambling method, as it is known, and become unlimited companies. That would be bad for British industry and I sincerely ask the Minister to think again on this issue. I see exactly why the Government want to get certain company details. They are probably right in this desire, but I do not believe that they meant to go as far as the small family business, the small retailer, and make him disclose all his operating details to his neighbour.

Mr. Sheldon: I cannot understand the hon. Gentleman's objection to re-registration.

Sir J. Rodgers: Without going into great detail on this, suffice to say that a great many people believe that by forming a limited liability company they have done something to protect their businesses. In certain circumstances, on the death of the proprietor, his widow likes to hold the shares. It would not be the same if a company were not limited. The same protection would not be there.
I turn to the second point about contributions for political purposes. I have every sympathy with those who say that this appears on reading the Bill—and continues to appear after hearing the Minister's speech—to be a most vindictive, petty, political measure. I understand and have some sympathy with the


argument that all payments made by a company for all purposes beyond the immediate running of the business should be disclosed; that figures should be given for charitable contributions, educational contributions, trade protection arrangements and research proposals as well as political contributions. That makes sense. But merely to pick out political contributions and say that they should be disclosed is exhibiting the political vindictiveness of the party opposite. [HON. MEMBERS: "Why?"] For the reasons I have given. Why are these more important than the educational contributions? Furthermore, I defy any one to say what would and would not be included under Clause 16(3, b), which is so vague as to be meaningless.
It would be far better to say that all contributions, or none, should be included in the operation of the Bill. I know of one or two companies that pay a sum of money to an organisation concerned with the protection of British capital invested overseas, with trying to educate people to a proper appreciation of the rules governing overseas investment, and making sure that if they are ever expropriated by the country in question, adequate recompense is paid.
To my mind, the protection of overseas investment is a legitimate use of funds. It is absolutely right. If something is right for the overseas market, it must be equally right for the home market. I believe that if an industry such as iron and steel is threatened with nationalisation, and the directors of an iron and steel company fervently believe that it is not in the interest of their shareholders and workers, and is not in the interest of the country, it is perfectly legitimate for them to speak out, and speak out forcibly, in putting forward their case against whatever political party has the the opposite view—

Sir Eric Fletcher: The Bill does not prohibit such gifts; it only requires their disclosure.

Sir J. Rodgers: If the Government wish to have disclosure, how do they define a political party? Is the first example I gave of moneys given to support the competitive free enterprise system abroad non-political, but political on the home front? We do not have any definition.
If the party opposite insists on going forward with the Bill as at present drafted with regard to political contributions, I hope that at every shareholders meeting from now on bodies of shareholders will not only insist on knowing the amounts of money given outside the operations of the company but will protest vigorously at the small amount that has been given to the protection of the competitive free enterprise system, for it is on that, and on that alone, that the country's prosperity depends.

6.2 p.m.

Mr. Edmund Dell: I have listened with great interest to the hon. Member for Sevenoaks (Sir J. Rodgers). We are now coming to a conclusion on the view of hon. Members opposite about the requirement to disclose political contributions. It appears that if the requirement is extended to include other types of subscription to organisations outside the main activities of the company—for example, for charitable, educational or research purposes—hon. Members opposite will not object to the requirement or regard it as vindictive, but will, indeed, support it. I confess that, like my hon. Friend the Member for Stepney (Mr. Shore), I would like to see the provision widened in that way, and perhaps we will be able to do something on those lines in Committee.
I am not an authority on company law and, to make the position absolutely clear, I am not an accountant, but a Bill such as this raises certain general considerations on which I want to comment. First, there are omissions that I regret, and I hope that we can later put right at least some of them. The Government suggest that if the Opposition co-operate we can take time to consider directors' share dealings. This matter needs to be dealt with.
The Bill should contain a requirement regarding the speed with which reports are produced by companies, because I think that the present law deals inadequately with this subject. I would support the creation of no par value shares. I should also like to know why the Board of Trade is not yet able to make up its mind about banks' privileges in regard to disclosure. We want something very much stronger than the present permissive Clause.
The main question is how far the Bill will contribute to economic efficiency: and what it will do to ensure the efficiency of companies. It is very difficult to make any contribution in this field through the medium of legislation. The market is less than perfect as a means of ensuring industrial efficiency. Shareholders are seldom capable of ensuring the industrial efficiency of the companies in which they invest. That being so, in my view the Government are reasonable and correct when they say, "We will try to give an additional incentive to the efficiency of companies by providing for additional disclosures".
The Government are absolutely right there, although I am a little sceptical as to how far it will achieve its purpose. The requirement may well assist investors to get in and out of companies which reveal good or bad results, but I do not think that it is likely to enable shareholders to exercise any more control over their companies, even if it were desirable that they should do so.
Here, I regret the omission of some provision for the control of non-voting shares. This is desirable in theory, even if not likely to have much effect in practice. It may be that, for the moment, we have to look to the Stock Exchange for stricter regulations, but I should have liked something in the Bill on the subject. But even if we had something dealing with non-voting shares which, I suppose, theoretically would enable a shareholder to exercise an additional degree of control over the company, I cannot see that in this Bill we have gone very far towards ensuring the greater efficiency of companies.
Perhaps more cannot be done by legislation—I am quite sure that it cannot be done altogether by legislation—but I should like to think that the Government are giving some consideration to this aspect. As it is, all we have to rely on in the Bill is a better informed take-over bidder and better informed Press comment as a result of additional disclosure. That in itself is insufficient, and there might through the creation of some other machinery be a more effective way of using the information which the Bill will make public.
One of the principal criticisms by hon. Members opposite is directed at the dis-

closure of exports. As I have previously, both here and elsewhere, pressed on the Government the desirability of companies having to reveal exports, I welcome what the Government are now doing and I am very sceptical about the value of arguments so far adduced by the other side against this proposal.
One argument is that this provision will give too much information to foreign competitors, but one has to remember that a very great deal of information is already available to foreign competitors, who have the sense to use it, from any country's export figures, which are broken down to a considerable extent. In many cases, though not in all, very considerable information is available to competitors, if that information is valuable to them.
The right hon. Member for Altrincham and Sale (Mr. Barber) gave an example in which a company which was exporting 85 per cent. of its turnover would, as the result of this disclosure requirement, have to reveal its profit, which would be a guide to its customers that it was, perhaps, charging too high prices. I think that example is a highly theoretical objection which is not likely to be a danger in practice. One characteristic of the export market is that it is highly competitive. I should very much doubt whether many cases of the type which the right hon. Gentleman described will exist.
I ask the Government one question relating to Clause 17, which creates the requirement to reveal exports. This may require further definition because there are indirect exports. Somehow indirect exports should be brought within this provision. There are two types of indirect exports. One bad argument, which is frequently heard and which has been repeated by hon. Members opposite today, is that certain companies say "We don't need to export; we supply components to others who do our exporting for us." This is sometimes true. There are certain products manufactured in this country, and in any industrial country, which cannot be exported. Industrial gases is an example.
But usually this is a thoroughly bad argument and merely an excuse by such companies for not going into the export market and supplying foreign manufacturers with components which they supply to British manufacturers. In most


cases I would reject that argument. Nevertheless, it is reasonable to include exports which are passed through merchants. I say to the Government that if such exports are not included and cannot be included in the disclosure, bad exporters are likely to use that as an excuse or an explanation for their bad export results.
In the course of his objections to this requirement, the right hon. Member for Reigate (Sir J. Vaughan-Morgan) introduced a very interesting idea. He introduced the idea, but rejected it. The idea was that perhaps we should go on and require that imports also should be revealed. I would not reject that idea with the ease and facility with which the right hon. Member rejected it. It is a suggestion worth considering. Why do we require disclosure of exports? First, it is to help us to judge the efficiency and export activity of a company. Secondly, it is to encourage others. Thirdly, according to my hon. Friend the Minister of State, it is so that the Board of Trade can give guidance and encouragement to exporters. I suspect that it is almost as important, if not as important, to disclose imports. Import saving is very important. I do not want import-saving resulting from autarchy, but where we can have efficient production in this country that kind of import saving is important.
I suggest to the right hon. Member for Reigate that there are at least two types of situation where information about imports might very well be of value to shareholders and people considering the affairs of companies, as well as to the Government and to our own ability to judge the economic activity of companies. The first example is where a firm is importing into this country the type of product which it manufactures in this country but of which it is manufacturing an inadequate amount owing to lack of capacity due to bad forecasting. That is something which shareholders in this country might like to know about the company in which they are investing.
The second example is a very specific one concerning foreign-owned companies. Before I go on I would like to say that I welcome foreign investment in suitable cases. One of the troubles with foreign investment in this country is that we know far too little about its significance

for this country's economy. We know that often these foreign companies are very good exporters. We also know that often they are very high importers. The N.E.D.C. Report on Imported Manufactures states specifically that they are the companies which above all are importing very large quantities of machinery and so forth into this country. In the recent N.I.E.S.R. Review, on page 77, in the course of its examination of research and development in electronic capital goods, it is suggested that sometimes in the case of American companies the overall balance is negative.
I should like to know more, and I think the country is entitled to know more, about the import-export balance of this type of company. At the moment virtually nothing is known about it. If we knew more we would be in a position more accurately to judge the specific effect on our economy of particular foreign investments. Of course there may be difficulties. There are indirect imports just as there are indirect exports but I think this can be got over quite simply as it can be in the case of exports.
On the subject of the salaries of directors, the Bill in Clause 6 is drafted in a very clumsy way. I support hon. Members on both sides of the House who have said that it could be drafted in a very much simpler way which would give the facts without this complicated bracketing mechanism. It could also deal with the point about the chairman of a company not necessarily being the highest paid official in the company. I cannot see why we should proceed in this particular way simply because it is the way in which the matter is dealt with in the nationalised industries.
I should also require revelation of salaries of senior managers, say over £10,000 per annum. I cannot see why that is not covered in the Bill. There is a great deal to be said in favour of disclosure of salary structures especially for senior staff. I do not know how far it would be desirable to go down in this, but I cannot see why salary structures should not be revealed here exactly as in so many other activities such as the Civil Service, local government, teaching and so on. One of the scarcest resources of the country is skilled managerial ability. If salary structure were revealed, that


might help us to secure the most economical distribution of these very scarce resources.
This Bill, which we are told is the first instalment, accepts more or less the nature of a company as it is at the moment. There is need for a far more radical review of company structure. The great privileges of incorporation and limited liability given under company law should be given in return for a certain adequacy of performance in their contribution to the national economy, and indeed in matters outside the purely economic. I recommend to the Government that in the course of their future examination of the problem they should consider a suggestion made by Professor K. W. Wedderburn in his recent Fabian pamphlet on company law reform. He suggested that it should be a condition for incorporation that a company would be willing to conduct collective bargaining wherever it employs a substantial number of workers. At the moment many companies refuse to do this. In a modern industrial State that refusal should be unacceptable under the law.
There are many things in this Bill which I welcome, and there are many others not in the Bill which I should like to see in it. While welcoming it I hope that we shall improve it in certain respects in Committee.

6.20 p.m.

Sir John Barlow: I have followed with considerable interest the speeches made by the hon. Members for Stepney (Mr. Shore) and Ashton-under-Lyne (Mr. Sheldon). I must confess that it would have been much clearer to all of us on this side of the House if we had known their credentials for speaking. One of them declared that he was not an accountant or a lawyer, but I have not the least idea with what authority the two hon. Members spoke. It may be that they were on no way connected with business and that fact may have accounted for some of the things they said.

Mr. Dell: The hon. Gentleman's remark is extremely interesting, and I presume he is about to reveal his own interests, although as a matter of fact they are well known to this side of the House. What he is surely now saying is

how difficult it is to persuade business men to read. If only he would read he would find the credentials in this respect of every hon. Member who has so far spoken from this side.

Sir J. Barlow: After that it is quite unnecessary for me to declare any interest at all. I am glad that my interests are so well known.
The hon. Members for Stepney and Ashton-under-Lyne attached great importance to the disclosure of more information in company returns and company accounts. I agree that there is a great deal to be said for showing very much more than is shown at present, both in chairmen's reports and in statistics which accompany the accounts. However, it is difficult to decide how much information should be given. It is quite possible to have a completely open book and give information which is of great use to overseas competitors and others. On the other hand, many companies have disclosed far too little information. Those of us who are connected with business always have the problem of deciding how much information to give in the best interests of the shareholders and the company and in the national interest.
It may be a very bad thing to give too much information: it may be very deleterious to the shareholders' interests. For that reason, it is a little dangerous to demand more and more disclosures, unless one knows exactly where one is going. Might not this move be followed by a demand for more information about general "know-how" in the works, or possibly more information about the research side of the works, which is of absorbing interest to a large number of people? One company with which I am concerned invented Terylene. It would have been appalling if that company had declared too much of its research before it had all its patents safely in the locker. It is easy for people who are not actually in industry to demand more and more information. A reasonable amount should certainly be given, but it would be a serious drawback to all concerned if too much were demanded.
Most of those who had spoken have referred to the true small private family company. This limited liability private company is and has been a very great asset to small industry for many years. It would be most unwise to destroy it


overnight without carefully considering what might happen. If a small company, commonly known as a one-man company, has to disclose a great deal of information about its turnover, what salary its chairman receives, and so on, relatively it is giving far more detailed information than a large company with nationwide interests, because the large company can automatically cover up information and the Board of Trade demand can bring it to light.
The Minister of State told us that private companies can re-register as partnerships. Such a course would open them up to very serious personal liability. It is a step which many of them could not afford to take. In any event, it might be a very bad thing for them to do it. It is said that the disclosure of more information would afford greater protection to creditors. I believe that most careful creditors have reasonable protection at present, if they use the information which is reasonably available. If it is not reasonably available, they should not do business with companies which will not give them reasonable information privately. After all, the banks deal with all kinds of firms and give credit to an infinite variety of firms and generally they do not make many mistakes. Banks have to find out, so why should not large creditors find out in a similar way.

Mr. Joel Barnett: Would not the hon. Gentleman agree that in most cases where banks lend any substantial amount they take debentures, which are not normally available to most suppliers?

Sir J. Barlow: Not necessarily. Banks do not take debentures unless they are warranted. In any case, the same action is open to creditors.
The question of the disclosure of the salaries of chairmen has been discussed. The giving of more information may be desirable, but this part of the Bill will have to be examined very carefully indeed, otherwise the information which is really required will not be provided. I see no reason why the salaries of chairmen should not be stated. It might be a good thing if more information were given about the salaries of other directors. We want to know exactly where we are going, what we are getting, and what use

would be made of the information. If these matters could be cleared up, I would have no objection to this.
Another portion of the Bill changes the present position under which banking and discount companies need not disclose their true profit. This question has been under discussion for many years. Unlike most of my banking friends, I take the view that nowadays banks and discount houses should declare their true position. It might have been unwise for them to have done so in years gone past when they were in a much weaker financial position, but I believe them now to be in a reasonably strong financial position. Banks, shipping companies and insurance companies which have hidden behind this exemption for many years should show their true profits. I repeat that this is my personal view and I know that it is not universally shared by the banking fraternity.
What I object to in the Bill is that it should be at the option of the Board of Trade as to whether this exemption is imposed. With the best intentions in the world, how is the Board of Trade to decide this issue? Ultimately the question will go before the President of the Board of Trade. As far as I know, most Presidents of the Board of Trade over the last century or so were not great bankers. The President of the Board of Trade would have to rely on information given to him by his civil servants.
I have no faith in the Treasury and civil servants to decide what to do in a case like this. It might well be that banks would be asked to state their true profits for a period of years. Then they might go through a difficult period and the Board of Trade would be in great difficulty because it would show weakness in the financial position if the exemption were reimposed. It might be very embarrassing for everyone. If it is agreed that banks should show their profits, it should be agreed by Act of Parliament and not by the Board of Trade deciding at its whim. I see that the Jenkins Report suggests that this exemption as applied to shipping should be revoked, but I do not see anything about it in this Bill. Perhaps the Bill is a little too short, or perhaps there was not room for it and this may be brought about in one of the supplementary Bills


which we have been promised in the future.
I recently came across a curious little company by guarantee which was created solely to maintain a small road in front of some houses. To tell the story very shortly, the fee for filing the annual returns is at present 5s. I gather that it is proposed in this Bill that the fee should be increased to £3. The annual income for the road mending which this company supervises amounts to between £100 and £150 a year. It means that about 2 per cent. of its income will go in filing its annual report. This may well be typical of thousands of other similar small companies by guarantee, and I would urge the Government to look at this and see whether they can do something to make things a little easier for such companies.
One form of greater disclosure called for is that different classes of business shall be shown separately. I hope the Minister without Portfolio, who I understand is to wind up the debate, will give us a little more information about this. At present the situation is anything but clear. Is a farmer, for example, expected to differentiate in the turnover between his milking herd, his beef herd and his sheep, or is it all to be considered as one business? A business with which I am connected is interested in spinning, weaving, printing, making up and distribution. Is that one business, or does it comprise half a dozen different businesses? There is nothing clear in the Bill as to how the different classes of business would be divided, nor what the Board of Trade is likely to demand.
As to the disclosure of exports, while that may be interesting, I fail to see exactly what it will achieve. In my early days in business when I was an export merchant of Lancashire cloth to the Far East, I did not have any machinery at all. I bought the cloth, practically all Lancashire made, and many of the manufacturers thought that it was going to be exported but they did not know for certain. Some of them devoted the whole of their time to manufacturing for export, while others manufactured partly for the home trade and partly for export.
It seems to me that the information which the Board of Trade would want

is really who makes the exports, rather than the person who actually handles them. I used to get orders from the Far East; I would then buy the cloth, perhaps process it, and then ship it. I was very unimportant compared with the manufacturer. This information for which the Board of Trade is asking may very well give quite a wrong impression.
If the Government are so anxious to increase exports I will give them an idea, for what it is worth. Suppose that 25 per cent. of our national industrial production must be exported, why not say that 25 per cent. of export quotas must be held by every industrial company in the country? In other words, they would export 25 per cent. of their production. Manufacturers who did not make anything for export would have to buy their quota in the open market. By that means, the Government would maintain the required percentage of exports.
Some reference has been made to non-voting shares. As a general rule I think none of us likes non-voting shares, but a case can be made out for them. Suppose there was a company which was largely family held, and it wished to put the shares on the market, while substantially maintaining control. There may be many people only too anxious to get hold of those shares and leave the management to those who are in command at the time of the transfer. Naturally, they would only buy those shares willingly. The shares would not be forced upon them. That they had great confidence in the management would be shown by the taking of the shares.
It is not necessary for anyone to buy non-voting shares. There is no reason why people who hold such shares should get any extra rights by the Government declaring that non-voting shares shall not exist, and that they shall have votes in future. It would seem to me that the larger public companies should certainly be discouraged from having non-voting shares, but a case can be made out in isolated instances by other smaller companies.
It seems to me that the one great omission from the Bill is that the Government have entirely overlooked the question of shares of no par value. This matter has been considered periodically


for a very long time. Lord Wrenbury, in 1918 considered the matter, and Mr. Justice Green did so in 1926. The Cohen Report considered it and said that although there was a great deal of logical argument in its favour, there was not much public demand for allowing it.
I had the honour in 1952 of introducing a small Bill which created a great deal of interest at the time, and it also showed how little many people understood shares of no par value. Shortly afterwards, in 1952, the Gedge Committee was appointed and it strongly recommended in favour of N.P.V. shares in 1954. There was a debate in 1955 in another place, when Lord Cromer strongly advocated that these should be allowed.
The Jenkins Committee, that we are considering so carefully, reported in 1962:
We recommend that the Companies Act should be amended to allow the issue of preference and ordinary shares of no par value and the consequential changes in the law which the Gedge Committee recommended, should apply…
That was very definite and I had hoped that we should see this great change made now. It would have been a great opportunity for the Government to do something useful.
The need for shares of no par value is much greater now than when I introduced a Bill 13 years ago. There are many companies which started with a capital 50 or 60 years ago and today, as a result of the ploughing back of profits and the diminution in the value of money, they are using vastly more capital than they started with and yet dividends are paid percentage-wise on the original capital, which is a gross distortion of the facts. As we are encouraging small investors to invest in securities of all kinds, I believe that it will be much easier for them to understand any difficulties in investment if no par value were allowed.
The Minister of State suggested that the Government were very open-minded about the Bill and were willing to consider obvious improvements. The hon. Gentleman mentioned certain things which may or may not be taken up, but I suggest seriously that the proposal which I have mentioned would be an important advantage to the Bill. It would be easy to operate, and I urge the hon. Gentleman to look at it and agree to it.

6.41 p.m.

Mr. Joel Barnett: I am delighted to be following in the debate my own Member of Parliament, the hon. Member for Middleton and Prestwich (Sir J. Barlow), and I am astonished to find myself to some extent in agreement with him. I disagree with him on some points, and I am sure I shall continue to disagree with him on other issues. The hon. Member seemed to indicate that we on this side of the House should show our credentials and he seemed very disturbed that his former opponent in his constituency, my hon. Friend the Member for Birkenhead (Mr. Dell) did not say how many directorships he held. I have no directorships but I am an accountant and whether that qualifies me to declare an interest I do not know.
I should like to make it clear that this is not a Bill for nosey-parkers. If it were, I would not want to have anything to do with it. I do not want a Bill which requires companies to give information for information's sake. The best of the comments we have had on the Bill in recent weeks, is the headline which appeared in the Financial Times on 4th February which read: "Information for Efficiency". This, to me, sums up the need for this type of Bill. There are, of course, other advantages, and defects in the Bill and I should like to deal with some of them, but it is the advantage by way of helping to make companies more efficient in management and control that causes me to support the general principles underlying the Bill.
I start with the basic view that disclosures are of general value. It is reasonably self-evident that they are a step to greater efficiency. If directors are aware that we will know more of what they are doing, or perhaps not doing, that cannot help but be of benefit to the nation. There are other advantages also by way of providing information for both present and future investors.
Here I do not agree with the hon. Member for Middleton and Prestwich that there is no value in giving this information to suppliers, and indeed to the suppliers of small companies in particular. The information can be of considerable advantage to the suppliers of small companies that are very near the borderline of solvency. However, if it


is shown in a particular instance that there is little benefit in a certain Clause and considerable disadvantage as in certain cases for small companies, I agree that we should find a way of amending the Bill accordingly. We should examine the Bill to discover whether in certain cases we have gone too far or in other cases not far enough.
I take first the question of the disclosure of chairmen's salaries. Was The Times right when it discussed this in its leader on 4th February and referred to the danger of prying too closely into personal affairs? Do we agree with the conclusion in that leader that the Bill represents a reasonable compromise? I find the remarks of my hon. Friend the Minister of State a rather weak defence of the way in which the Bill is drafted. I feel that to disclose only the chairman's salary and the rest in broad outline, with bands of £2,500, is totally inadequate.
I start from the assumption that it is good that directors should be conscious of the knowledge that their salaries are known to the outside world, and that they have no need to be ashamed of such knowledge. Why should they be ashamed of a high salary? They should be proud of a high salary, provided always that they can show the salary to be justified. If they cannot justify the salary, no matter how high or how low, there is all the more reason why it should be disclosed.
I therefore would go further than the Bill and have all directors' salaries disclosed. Indeed, I would go as far as to disclose perks and fringe benefits, but for the benefit of all directors I would also make it clear that they could or should disclose the net figure, that is net of Income Tax and Surtax if they wished to do so.
On the question of the small companies, I found the comments of hon. Members opposite that there is some deep-rooted hostility to small companies on this side of the House to be utter nonsense. I cannot see any arguments for continuing to give exemption to small companies not to publish their balance sheets. But there is a difference about the other matters which we are now asking small companies to disclose. Here I am not quite so happy, but if small companies are solvent

and do not wish to publish they have every right, and are entitled under the Bill, to re-register as unlimited companies. But if they wish to retain the not inconsiderable advantage of limited liability I see no reason why they should be given special exemption from publishing their balance sheets.
If they are barely solvent, or for whatever reason, they do not want to continue publishing, I cannot accept the argument of some hon. Members opposite that it would be presenting a rather difficult situation in that it would be hard on the small companies to be unlimited. I followed that argument closely, but I see no good reason why a small company desirous of retaining the advantages of limited liability should not have to publish its balance sheet. As for other disclosures, and in particular turnover, I would go some way with what has been said in the debate—that we could grant some exemption to some of the very small formerly exempt private, unquoted companies, the close companies which we debated at considerable length on the last Finance Bill. But to grant such exemption to all unquoted companies would be to go far too wide.

Mr. William Clark: Is the hon. Gentleman saying that exemption should be given to all close companies?

Mr. Barnett: The hon. Gentleman should wait until I have finished the point. I was saying that it would be going far too wide to grant exemption to all unquoted companies, and I was about to come to the question of how to define which companies should or should not be granted exemption. In Committee, we might consider, perhaps, granting exemption by reference to a limitation related to size, size of turnover, size of capital or size of net asset value, though this would be extremely difficult because of the question of valuation of assets, to which I shall come in a few minutes. We might consider defining the limitation by way of number of shareholders. Very often, the type of company to which we would wish to give exemption would be the small family concern of husband and wife, the small formerly exempt private company. The larger private companies could then be excluded from any such exemption. I


am not altogether happy about where one can draw an arbitrary line, although I am certain that it would be going too far to exempt all unquoted companies.

Sir T. Brinton: Will the hon. Gentleman consider the suggestion that, in order to qualify for exemption, a company should be both unquoted and a close company according to the definition in the last Finance Act, remembering the considerable disadvantages in being a close company?

Mr. Barnett: I should not necessarily go all the way with the hon. Gentleman in that. There are some very large close companies which I do not consider ought to be entitled to exemption. I do not know whether Pilkingtons, for example, would be a close company under last year's Finance Act, and there may be others. To agree with that sort of definition one would have to have a great deal more information.
Should there be disclosure of turnover in all the various classes as defined in the Bill? We have heard the argument today about the danger of giving information to competitors, including international competitors. This argument is often much overstated. One cannot help feeling that people have repeated it so often that they have forgotten, if ever they knew, what argument there was for not giving the information. In my view, the advantages of giving this additional information considerably outweigh any disadvantages or dangers which there might or might not be. The ability to hide large loss-making sections of a company's activities cannot help rapidly to make this type of company more efficient, and, as I have said, the danger of giving information to competitors is very much overstated.
To argue that it would not be right to give international competitors information about costs is completely to underestimate the type of competitor with whom one is dealing. Presumably, in arguing about the danger of disclosing information to competitors, we are thinking in terms of tough, aggressive and hard-headed businessmen who are very much aware of costs and of the products against which they are competing. To suggest that we should in some way be giving to competitors information which they would not easily be able to obtain

otherwise is very much to overstate the case.
I come now to the question whether it is right to provide for the disclosure of information about exports. My hon. Friend the Member for Birkenhead referred to this at length. I appreciate that there could be some unfairness in requiring all companies to disclose information about exports when, for example, for a variety of reasons, there are some which are unable to export. Again, there are companies making import saving goods which are of equal value to the balance of payments. But one can ask why publicity should not be given to this aspect of a company's work when there are companies which are importing unnecessarily and which, if they took a little trouble to increase their own capacity, could save the balance of payments from a higher deficit than they would if they were exporting on a small scale.
I am, therefore, aware of all the difficulties involved in the revealing of export figures, but I think that the criticism of hon. Members opposite shows that they have a completely wrong view of the whole reasoning underlying our desire to have exports revealed. In spite of all the inherent difficulties, I am myself convinced that there is value in the revealing of exports if only because it will cause directors to justify their company's failure to export. If it goes a little way to make companies more export-conscious, then this small degree of unfairness towards a company which has not been able to export and which has a good reason for not doing so will be justified. Such a company need do no more than put a simple paragraph in its report explaining why it has not exported. If, on the other hand, exports are nil year after year, why on earth should not directors have to justify that nil figure?

Mr. William Baxter: I am following with great interest my hon. Friend's argument that all should, more or less, be revealed. Does not he think that this might be a dangerous practice for both individuals and companies? There is an old Scottish saying,
But still keep something to yoursel
Ye scarcely tell to ony.
meaning that a man has not to disclose all that he has or all that he is likely to be


doing. I think that there is some danger in disclosing everything, exports, profits, directors' salaries and so on. Is there not some advantage in keeping certain things private?

Mr. Barnett: I can appreciate my hon. Friend's Scottish secretiveness. Perhaps, if he catches your eye, Mr. Speaker, he will be able to develop his argument for the retention of some of his secrets. The point I am making is that disclosures generally are of value and that, unless a company is able to give a good reason why it should not disclose certain information, then it should disclose it because disclosure is, by and large, for the national good.
I come now to some of the important omissions from the Bill. I see no reason for hiding the large holdings at present held by nominees. I see absolutely no reason why directors' dealings should not be disclosed. [HON. MEMBERS: "Hear, hear."] This has been a question of the greatest public interest in recent years, and it seems to me that a quite simple Amendment could put the matter right. I am delighted to hear the acclamation with which my remarks are received on the benches opposite, and I am sure that we shall be able to adopt some such Amendment in Committee. I hope that the Minister will agree to that being done. To have a Companies Bill before us and not to deal with this matter would be a shame.
As regards the banks and discount houses, again I start from the standpoint that there is no reason why they should not disclose in the same way as other companies will have to disclose. In my view, the way to deal with them is to say that they are treated in the same way as other companies, putting the onus entirely on them. If they can prove to the satisfaction of the Board of Trade that there is a good reason why they should not disclose, well and good. But all the arguments I have heard from bank chairmen and others and from a reading of the Jenkins Report lead me to believe that there is very little ground for saying that banks and discount houses should not disclose.
There are many other questions arising out of the Bill, which is not surprising in so complex a matter, but no doubt

they can be left to the Committee stage. I think, for example, of paragraph 16 of the First Schedule, which refers to some special circumstances which should be disclosed affecting the taxation of profits. I do not know what my hon. Friend had in mind, whether he was thinking that there were large items in the trading account of the company which are disallowed for tax purposes—for example, entertainment expenses, some legal expenses and other charges which are not normally allowed for tax purposes. Perhaps it would help to publish the tax computation as submitted to Income Tax inspectors when accounts are submitted. I should be glad to hear what he has in mind.
Paragraph 3 of the First Schedule refers to the separate identification of fixed assets, current assets and assets which are neither. I am thinking particularly of the item in a balance sheet defined as goodwill. Under the Schedule this is particularly excluded. There are occasions when a goodwill item in a balance sheet can be of real value, and there are many other occasions when it is completely worthless as a balance sheet item. In the Exchange Telegraph cards and in most information about companies this is excluded for the purpose of calculating the net tangible assets. At the same time, there are people who look at the Exchange Telegraph cards and other information put out by companies who are perhaps misled by this item on a balance sheet. We should I feel be given a little more information here.
Although I appreciate the reasons for it, I am not happy that we have excluded from the Bill the necessity to take new valuations on fixed assets or to have valuations at frequent intervals. If we are to have a clearer picture of the relationship between net profits and real assets it will be extremely difficult—even taking the additonal information that will have to be given under the Bill as regards the valuation of assets—without having new valuations of large fixed assets.
There are many who are worried about the additional administrative problems which will be brought about by the Bill and the administrative work for my professional colleagues, the Board of Trade and the Registrar of Companies. I should like to see the information required by the Bill supplied even more quickly


than is provided for in the Bill. I should like to see half-yearly figures. If we are to get the maximum possible advantage from the information supplied, we should have the information as quickly as it is possible to have it. With the Bill as drafted, it could be up to nearly 12 months from a company's year end before we have the information. I appreciate that if we are to bring the period forward it will make it an even greater administrative task for accountants and the Board of Trade, but I think that we should have it in mind to deal with the problem in the not-too-distant future.
I accept that for the Registrar of Companies this will involve a great deal more work, but I cannot help feeling that the Registrar, in company with many other Government Departments, could do a great deal more by way of mechanising their office systems, which would help considerably if we are to get the information more quickly. But I am not happy about being able to provide the information quicker, because, to my personal knowledge, most accountants are already very heavily over-worked.
I think that a great deal more could be done to implement the Jenkins Report by way of non-voting shares and other matters. Perhaps we should be considering, as The Times said in its leading article on 4th February, the much wider question of whether the limited liability company is really suited to the industrial structure and society of the second half of the 20th century. We have been told on many occasions that we are short of time—Parliamentary time, Parliamentary draftsmen's time and all sorts of other people's time. I cannot help feeling that any new comprehensive review will not be in the second half of the 20th century but is much more likely to be in the first half of the 21st century.
The Bill may not go as far as many of us had wanted, but at least it helps considerably. Sleepy, lazy and inefficient boards will be forced either to wake up or to be shown up. The Bill may not be as revolutionary as we would have liked, but it will frighten the inefficient and in that way be of general benefit to industry.

7.6 p.m.

Mr. Anthony Grant: We are all aware of the credentials of the

hon. Member for Heywood and Royton (Mr. Barnett) and respect very greatly the expertise he brings to financial and company matters. The only thing we could not understand during the passage of the Finance Act last year was why he always went into the Government Lobby. Now we shall be looking for a great deal of support from him when this Bill gets into Committee.
I would refer to the hon. Gentleman's very interesting argument about the disclosure of exports. The problem to be resolved is whether the danger to companies who disclose this information—the danger of revealing it to competitors—outweigh the advantages to be derived from getting the information. I tend to disagree with the hon. Member. I think that on balance it is possibly dangerous. But I do not wish to follow the hon. Gentleman on that aspect.
This is an important Bill. The limited liability company system is the basis of our economy and affects the lives of every man, woman and child in the land. I am certain that the time is ripe for a Bill of this nature giving further disclosure. There has been very great growth in the size and number of companies since 1948, and the problem of disclosure is fundamental. In so far as it deals with that, I welcome the Bill. But I think that it is a rather feeble and half-hearted attempt to deal with what is a much more major problem. It is astonishing that the Labour Government, whose supporters so often breathe fire and brimstone against the company system, should be so timid when reform is within their grasp.
I am very interested in the wider share-ownership movement which is designed to encourage investment and spread ownership throughout the country. In that movement we had a small sub-committee consisting of a number of people much more eminent than I am in financial circles, but I chaired the subcommittee and some of the comments that I shall make are the conclusions of that group,
I turn first to the question of exempt private companies, to which the hon. Member for Heywood and Royton referred. It is important to understand and to perpetuate the distinction between public companies and private companies. Public companies should operate in an


atmosphere of publicity and protection for the investor. But many private companies have their annual general meeting over the breakfast table between husband and wife. There is a strong argument for saying that it is essential to maintain the distriction in treatment between private and public companies, because unless this principle of distinction is maintained further reform of the disclosure requirements under company law may be inhibited by the need to tailor the rules to the separate situations.
The question of the omissions from the Bill loom rather larger than the actual substance of the Bill itself. Some of the omissions are very fundamental. First, there is the question of non-voting shares. I do not go as far as some hon. Members who say that these should be abolished altogether, but I think that they should be clearly labelled so that an investor can see clearly what he is getting and what his rights will be, rather than the vague "A shares" or "B shares" or some other rather mysterious nomenclature. As has been argued so much better by my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow), no par value shares should be allowed. It is in the interests of investors that they should now be allowed, and I hope that the Government will amend the Bill accordingly.
I also agree with the hon. Member for Heywood and Royton when he said that the questions of nominee share holdings and directors' share transactions are vital. Many more quarrels have arisen over nominee share holdings and directors' share transactions than have ever arisen over directors' remuneration. Indeed, it is infinitely more important a matter than the question of emoluments. I hope that the Government will seriously consider this in Committee. There are good examples to study. The United States model is a useful one to take. Under such a system, anyone having 10 per cent. of nominee shares would have to disclose all their transactions to the Board of Trade in a form suitable for publication in the Board of Trade Journal. Director's share transactions are also vitally important.
More should be done for the protection of minority interests. The Bill has important omissions in this respect, and

amendment of Section 210 of the Companies Act is both necessary and overdue. A lot of investors suffer more from incompetence and negligence than from direct fraud. Half-yearly accounts are of great value at a time when things move so fast that annual accounts cease to have any value by the time one has to make a decision.
I shall not deal at length with the question of political contributions. It is irrelevant to company law. I regret that Parliamentary time is to be wasted on it. But it is rather surprising that foreign political parties are excluded. I cannot see why it should be wicked to contribute to a British political party but not to contribute, if one wants to, to the Democratic or the Republican Parties in the United States. This is a serious omission.
I do not think that my hon. Friends need worry too much about this aspect of the Bill. I suspect that when shareholders realise how very little is contributed to our party by their companies in protecting private enterprise, they will rise up and demand that very much more be paid in future.
The question of partnerships and their position at law was dealt with in the Jenkins Report and I know that my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) intends to deal with that if he catches the eye of the Chair. I agree with what was said in the Report, and I hope that the Government will consider it seriously. The problem of investment clubs—a relatively new phenomenon for which I know that there is considerable support on both sides of the House—flows from what the Jenkins Report said. I am pleased that the Chief Secretary to the Treasury is here, because I know that he is aware of the problem and has expressed to me his view that the investment club movement is a desirable thing to develop.
These clubs started, in the main, after the 1948 Act, but the main growth has taken place since 1962, when the Jenkins Report was published. There are over 2,000 investment clubs, so far as is known, in the country, and they invest between £1 million and £2 million per annum in British industry.
Apart from the financial side, they are of considerable educational and social value in that people get together to consider economic and financial problems


and to take decisions. I said in the House last year that there are young Conservative investment clubs and that Pressed Steel workers and Fords assembly line workers also have then. In addition—although it is only a rumour—I believe that there is an investment club among some servants of this House. I must not put it as higher than a rumour. However, this movement is important and should be encouraged as the valuable development that it is. As a result of the case described as in re Bromley Wholesale Grocers' Association, 1964, considerable doubt has arisen as to the legal form of the clubs. Section 434 of the Companies Act says:
No company, association, or partnership consisting of more than twenty persons shall be formed for the purpose of carrying on any business…that has for its object the acquisition of gain by the company, association, or partnership or by the individual members thereof, unless it is registered as a company under this Act…
Many investment clubs have more than twenty members and many more in future will do so. It is not suitable that they should register as limited companies. As a result of discussions with the movement, I understand that it desires an Amendment to enable the clubs to be lawful and to make their position quite clear at law. A simple Amendment should be brought forward or accepted by the Government in Committee, if necessary coupled with a suitable registration system or set of rules drawn up by the National Association of Investment Clubs and approved by the Board of Trade.
I am certain that the Government can think out a suitable formula, but I urge upon them this very important matter. I appreciate that the Bill may be only the first instalment of company law reform, but there is great uncertainty in this growinig and valuable movement and I urge the Government to deal with the matter in this instalment and not cast it forward to the future.

Mr. Eric Lubbock: Does the hon. Gentleman realise that Section 434 of the Act, which goes back to legislation of 1862, is also placing obstacles in the way of professional partnerships which wish to merge?

Mr. Grant: I appreciate that, and I expect that my hon. and learned Friend the Member for Darwen will deal with it more fully.
This is an important Bill. It will have a profound effect on our economic and legal system. So far as it is inspired by party political motives, I condemn it. But so far as it reforms defects in the law and enforces greater disclosure of detail to investors generally, I support it. Because the latter is just predominant, I shall support it—provided that I get the assurances I have sought, particularly with regard to investment clubs.

7.18 p.m.

Mr. Charles Fletcher-Cooke: It is an unusual pleasure to follow one of one's own hon. Friends in a major debate in this House, and the fact that so early in the evening, I will not say so little interest is shown by the Labour Party, but that so much interest is displayed on this side in comparison with certain other sides of the House, must itself be of significance and must have a moral in it somewhere.
I want first to take up the trailer drawn for me by my hon. Friend the Member for Harrow, Central (Mr. Grant) about the question of partnerships. I want to draw attention to a fact that the Minister of State knows very well—that Section 434 of the Companies Act, 1948, prohibits a partnership, generally speaking, of more than 20 persons. In the case of banking, it is partnerships of more than 10. The reason for this goes back, as the hon. Member for Orpington (Mr. Lubbock) mentioned, to the 1862 legislation. Prior to that, there were far too many of what one might call "spiv" partnerships, since there was not the benefit of incorporation for limited liability. There is a moral for us in the whole of this legislation, because if we make the penalties of incorporation too severe, if we make the price of it too heavy, then we shall find a drift back into some form of partnership which will give the public much less protection in many ways than does the limited liability company.
I wish to speak in the first instance about those partnerships which do not have the option of incorporation. They were defined by the Jenkins Report as those professional firms which cannot by law or professional practice or custom be incorporated and yet which wish, as many do under existing economic conditions, to have more than 20 partners. We have a great foreign currency-earning


potential in our great firms of accountants, of solicitors and of other professional people. They have ramifications all over the world in a way which the legislators of 1862 cannot possibly have foreseen. In those days people relied very much on the neighbourhood for the reputation of good conduct, probity and solvency, and I have no doubt that our forebears over 100 years ago regarded professional partnerships in the sort of county town atmosphere which was then very much the prevailing atmosphere.
Today the household names in accountancy and in our legal firms, solicitors and others in the City of London, go all over the world, and there is no reason why they should still be restricted to 20 partners. I am told that it causes them great embarrassment. They need more than 20 senior workers. They are driven to all sorts of shifts by which they have to call them by other names, and there have to be gradations of partnership which are often invidious and quite unnecessary.
This is a step recommended by Jenkins which everybody wants and which ought to have been in the first draft of the Bill. It is not good enough for the Minister of State, whom we all like, to come to the House in his engaging way and to say, "This is the best that we have been able to do so far, but if you can put in one or two more good things we are prepared to receive them." This ought to have been in the first draft of the Bill. But if the hon. Gentleman is prepared to put it in here and now, at the first opportunity, he shall be forgiven in this isolated instance. It must be put in the Bill because it is holding up the course of business and the opportunities for our professional people in a quite unnecessary way and one which prevents them from expanding their worldwide business in the way in which they should expand it.
I said earlier that if the ready incorporation of small business were to be made too difficult and if too many obligations were to be placed upon it, then I feared that there would be a drift away from incorporation. Indeed, both Jenkins and the Bill seem to encourage this. There is the provision for de-registering in the form of an unlimited company, which I do not think is a very good move. I can

think of other dodges—for example, the dodge of the limited partnership, which may be revived. By this dodge one can have partners with limited liability except for one of them. One partner must be unlimited in his liability but the others can be limited in their liability. I believe that there is already a tendency towards this as a result of the Corporation Tax, and I should not like to see it go any further.
What will happen is that groups of 10 or 15 or up to 20 will get together and find a man of straw, someone with no property, as the unlimited partner, and all the others, who have some stake and property, will be limited. I fear that there will then be a great flow of activity into the limited partnership, and then none of the requirements for disclosure, such as are quite correctly set out in the Bill—some of which we think ought to be expanded, for example, directors dealings in shares—will attach to the limited partnership. This Bill does not extend to the limited partnership nor do many of the provisions of the Companies Act as it stands.
There will be other dodges even if that is shut up—for example, such dodges as people turning themselves into friendly societies or co-operatives. We must pause before putting upon small business too much difficulty. I should like to adopt what my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) said in starting the debate, although it was very encouragingly taken up by the hon. Members for Stepney (Mr. Shore) and Heywood and Royton (Mr. Barnett). They suggested that we must have two different codes. They said that we must have a rigid and severe code for the large companies but that revelations essential to them might in many cases do damage to the small company. It is not only revelations in the accounts which we have in mind but also a great deal in the constitution and mechanism of company law which does not fit both of these breeds—which are different breeds. For example, it is quite right that the director of a large company should be removable by an ordinary resolution of 51 per cent. of the shareholding, but in a small family company that often leads to great oppression and to great injustice, for obvious reasons. There are many other cases in which the same rules should not apply.
There will always be anomalies, but I believe that it is possible to draw a line. We can argue whether it should be by the paid-up capital or the assets or by the concept of the close company, or whether the quotation on the Stock Exchange should be the dividing line, but any of these lines are comprehensible and they are all possible. We ought to make this distinction and not put a straitjacket upon the whole of incorporation in the way in which the Bill tends to do. Jenkins recommended that the need for disclosure of such provision as turnover should not apply to certain companies, and we must explore that possibility. We must not put this straitjacket on the structure from top to bottom, because if we do we shall find that the traders who do not like this will take refuge in what I regard as much less wholesome methods within the limited liability company.
That is the theme of the few words which I wish to contribute. May I refer to the question of export goods and the need for disclosure there? I am not against this particularly, nor do I think that it is unfair on the people who make components, but I think that it is greatly unfair on those who use what they consider to be agents but what we, as lawyers, know, to be principals. There are also great hardships over the export rebates. Clause 17(3) says:
For the purpose of this section, goods exported by a company as the agent of another person shall be disregarded.
That means a legal agent. It does not mean the sort of exporters to whom business men refer as agents but who are principals. It is those commercial agents or legal principals who will be getting all of the glory under the Bill but who are little more than post offices and, as often as not, do not go out and get the markets but who, owing to the method of trade, are regarded for purposes of export incentive, as the principal and the person to whom the money and the glory shall go. Although this is no doubt put in for administrative convenience it does not reflect the realities of the situation and it does not give the credit to those who deserve it.
This has been an interesting debate, because I think that the Government are somewhat surprised at the warmth of welcome which the Bill has had. We think that it is half a loaf. It is a scandal,

that directors dealing with the shares of a company should be omitted. No smaller word can be used. We cannot believe that it is difficult to draft this. It is in the codes of most of the civilised countries of the world and it must be put in the Bill straight away. I feel much the same, although I dare say that there is more controversy on the subject, about shares of no par value. There are many other things, and all that we can say is that we want to make this a better Bill.
We want to put in things to see that what is done with a good motive for the larger companies does not unwittingly damage and reduce small companies. The Minister of State made a revealing remark in opening the debate. He said that the registration fees were being increased to try to check the proliferation of companies. The fees have gone up not only because the expenses of registration have gone up, which they have, and of course fees must go up with them, but also to try to check the proliferation of companies. I know that one can find all sorts of comical instances of companies being incorporated with hundreds of different and strange, high-falutin names that are quite dormant and do nothing. It is not the business of the Government to try to stop people incorporating or to prevent proliferation of incorporation, as the Minister of State said, by means of putting up the fees. I do not like that attitude to the limited liability company, which for a hundred years, in spite of several abuses, has served us all very well.
I hope that on reflection the Minister will think that it is not correct to use the fee system to discourage people from incorporating if they wish to, particularly in view of the probability, and rightly so, of the disclosures that they will hereafter have to make.

7.34 p.m.

Mr. J. Bruce-Gardyne: Like my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke), I find myself in the unusual position of following one of my own hon. Friends. It seems to show a somewhat disappointing lack of interest on the other side of the House in what to my mind is a rather important sub-just for legislation. This is a matter of considerable importance to those of us who believe in the functioning of the free enterprise system.

Mr. Patrick Jenkin: I have no doubt that my hon. Friend has noticed the efforts of the Whips on the other side to try to beat up some support in this debate, apparently so far without success.

Mr. Bruce-Gardyne: This is a matter of considerable importance to those of us who believe in the effective workings of a free enterprise system. On the whole hon. Gentlemen opposite are not, perhaps, so sure of that proposition. The hon. Gentleman the Member for Stepney (Mr. Shore), in what I thought was a most interesting speech, with many parts of which I agreed, tried to define what the purpose of company legislation should be.
I would like to try to follow in his footsteps with a slightly different definition. All company legislation should essentially have two objectives. First, it should be designed to encourage the efficient use of capital and to provide the shareholder with the information to judge where his capital is most likely to be most efficiently used. Secondly, it should be designed to protect the shareholder from oppression or fraud by management.
I felt that in introducing this Bill the Minister of State was showing signs of a modest guilty conscience about the extent and provisions of it. After what he has heard I think he will feel that this was entirely justified. This Bill does a little. It takes a small step towards improving the ability of a shareholder on the stock markets to judge the efficiency of a company and its use of invested capital. In that sense it marks an improvement on the Corporation Tax, which marked a giant step in the opposite direction.
On the other hand, I very much regret that the Bill does very little to provide additional security for shareholders against oppression or fraud by management. We have heard a lot from the Minister of State about how this is only going to be the first bite at the cherry. I feel like reminding the Minister of the famous saying which is always attributed to the Governor of North Carolina, in conversation with the Governor of South Carolina. It may be recalled that this remark was:
It is a long time between drinks.
I suggest to the Minister of State that he is likely to find it a long time between

bites. As my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) pointed out, one cannot take regular bites at this particular cherry. It cannot be done, and we all know that. While I regret that the previous Government did not introduce legislation to carry through what to my mind were the admirable proposals of the Jenkins Report, I am bound to say that in this instance I think that no bread is better than half a loaf, because until one has introduced the legislation there is always the chance of a decent Bill being brought forward. Once one has introduced a half-hearted Measure like this, it is going to be a long time before we return to this subject.

Mr. Darling: indicated dissent.

Mr. Bruce-Gardyne: The Minister of State shakes his head. I suspect that in the event he will find otherwise. I am a bit sceptical about the arguments over the pressure on the Parliamentary timetable. I think that it would be correct to say that Clauses 3 to 8 of this Bill, and the First Schedule, could have been put through, if the Government were so minded, by Statutory Instrument under Section 454 of the 1948 Act. If that had been done there would have been room to deal with many of the other aspects of company law which, as has been pointed out, are urgently in need of reform, without producing a monster Bill. We are entitled to ask why the Government did not introduce these Clauses and the First Schedule by Statutory Instrument under Section 454. I cannot help feeling that the reason that these Clauses are needed in the Bill is to give a veneer of decency and respectability to Clause 16 which, as the Minister of State so amply demonstrated, deals with the one thing which is near and dear to the hearts of right hon. and hon. Members opposite. It is a tragedy—I do not think that that is too strong a word to use—that the opportunity has not been taken to deal with some of the defects which, inevitably, in the course of time have appeared in the 1948 Act.
My right hon. and hon. Friends have referred to a number of these defects. The one which, perhaps, concerns me most is the question of inside share dealing. We have seen any number of examples in the last year or two—and


the Minister of State is very well aware of them—of the defects in the present Act and of the inadequacy of the information which is required to be exposed to shareholders in a company concerning the dealings of directors. There is nothing in the Bill to rectify the situation which has time and again in recent years led to the oppression of shareholders by management.
The Minister of State justified the decision, by Clause 6, to expose chairmen's and directors' salaries on the ground of the shareholders' right to know; and I would not, on the whole, dispute it. But I cannot help pointing out, as several of my right hon. and hon. Friends have done, that under the Bill they will not know. The Minister of State referred to a particularly glaring case concerning a director's salary which came to light last year. The significant point about that instance was not the salary but the service agreement. There is nothing in the Bill to deal with the exposure of service agreements. Time and again there have been instances in which service agreements represented oppression of public shareholders by management and directors, and it is a great pity that the Bill does not deal, or attempt to deal, with this aspect of the matter.
I should like to say a few words about nominee shareholding, which has been mentioned by several of my right hon. and hon. Friends. I have always been doubtful about the feasibility of devising legislation to prohibit nominee shareholding. But if we have effective legislation on the exposition of inside share dealing and of beneficial ownership of 10 per cent. or more of the equity, then the need to devise—I accept that it would be exceptionally difficult to devise—legislation to prohibit nominee shareholdings would also entirely disappear.
I wish to say a few words about the famous Clause 16 about which we have heard so much. I do not object to the Clause, although I agree entirely with what my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) said about the remarkably discriminatory nature of it. If we are to have the disclosure of subscriptions to political funds, it is only right and proper that there should be disclosure of subscriptions to charities and of other subscriptions of

this nature. I do not object to the political aspects of Clause 16 because I have more than a sneaking suspicion that right hon. and hon. Members opposite will find that it boomerangs and comes straight back very hard at them.
I cannot help feeling that when shareholders look at their annual reports and see what contribution their companies are making to political funds they will say time and again, "This is grossly inadequate" in view of the assaults which the Labour Party has made on free enterprise. There will be demand after demand from public shareholders that companies which are not contributing to political funds should probably do so or that those which are contributing should increase their contributions twofold, threefold and even fivefold.
I turn briefly to the requirements in the Bill for increased disclosure by public companies. As my right hon. and hon. Friends have pointed out, there is the world of difference between the requirements which should be demanded of public quoted companies and the requirements which should be demanded of small private unquoted companies. I entirely welcome the increased requirements for disclosure proposed in the Bill for quoted public companies. My only regret is that they do not go a good deal further.
I take issue on one point. Hon. Members opposite have suggested that the exposure of turnover figures will make it easier to judge the efficiency with which public companies, or, for that matter, private companies, are using their capital. I have always felt that the return on capital employed is likely to be the best yardstick of efficiency. That was why I interrupted the hon. Member for Stepney (Mr. Shore). In order to be able to judge the return on capital employed, the most important consideration is the revaluation of assets. If assets have not been valued for 100 years, as may be so in many cases, the return on capital employed is fairly meaningless.
I regret that the Bill, while requiring the exposition of turnover figures, does nothing about the revaluation of assets. Although I appreciate the drafting difficulties, I cannot help wondering why it was not possible to devise something along the lines of the recommendations


of the chairman of the Stock Exchange, in particular the recommendation that the date of purchase of major items should be included in the balance sheet at cost. Something along these lines might have enabled us to get a better idea of the return on capital employed in public companies. I do not think that publication of turnover Will achieve that effect. However, I have no complaint about the publication of turnover. It is a very reasonable and, indeed, desirable requirement to put on public companies.
On the other hand, I have very serious reservations about the wisdom of extending the requirement for disclosure of turnover to small unquoted companies. This has been dealt with at some length by a number of my right hon and hon. Friends who are far more experienced in this matter than I would dare to pretend to be. I should not like to add much to what they have said except that, representing a Scottish constituency, I am particularly aware that in Scotland we have a rather higher proportion of small private unquoted companies than is the case in England. A valid objection to the turnover requirement in the Bill is that it may make these companies very much more vulnerable to the larger company, whether in England or perhaps in the United States, which is on the lookout for a take-over. This could be particularly undesirable in the case of companies domiciled in Scotland. We have had too much experience in recent years of what happens when the small private company is taken over by a large company from south of the Border or from the United States. All too often, we find that the brains and the motive power of the company disappears from Scotland to a headquarters in London, the United States or wherever it might be.
From that point of view, quite apart from the arguments advanced by my right hon. and hon. Friends on the point, we should definitely look again at the requirement about the disclosure of turnover by small unquoted private companies. It hardly needs to be said, after all that has been said before, that Jenkins comes down firmly on the other side for what seem to me to be excellent and adequate reasons.
I should like to refer to one other recommendation of Jenkins about which

so far the Government have seen fit to do nothing in the Bill. One of my hon. Friends who spoke earlier referred to it. It is the question of the special exemption for shipping companies.
The Minister of State will recall that the opinion of the Jenkins Committee about the exemption for banks and insurance companies was rather divided, but there was a flat recommendation in paragraph 416 that the Companies (Shipping Companies Exemption) Order, 1948, should be revoked. I cannot see that there are any impressive arguments against it, and it is regrettable that the Government have not included it in the Bill.
I should like to conclude on a note of deep regret. Frankly, I expected and hoped for better from the Minister of State. This is a mean, meagre, and rather muddle-headed little Bill. In some ways, it does not go nearly far enough. In some other directions, perhaps, it goes a little too far. As my right hon. Friend the Member for Altrincham and Sale pointed out, it is inspired by a spirit of political vindictiveness, and I regret to say that I cannot help feeling that the Bill will come to be regarded as a fitting monument to the right hon. Gentleman's tenure of office at the Board of Trade.

7.53 p.m.

Sir Frederic Bennett: It has become almost monotonous to remark that in this debate one hon. Gentleman after another from this side has spoken. The point has been made several times already, but still it seems that we are not to have any more contributions from the benches opposite, despite the fact that it is their Government who have introduced this Measure. It is quite amazing when one considers all the sound and fury that went on in the Socialist Party's manifesto and election addresses about the great change that must come in our law and that political contributions must be published. It appeared in pledge after pledge in almost every election address of hon. Members opposite and was certainly in the party manifesto.
Then we come to today, but where is the sound and fury now? There is hardly an hon. Gentleman opposite to support what they regarded as a vital cause only a few months ago. It may be that there is a certain amount of coyness on their


part, because it is almost the only pledge that the Labour Party has carried out of all those in its manifesto, and there may be a certain nervousness in the lack of speakers from the benches opposite in case hon. Members on this side point out that fact to them.
While on the subject, I should like to stress again that if the party opposite are going to escape from the charge that they were guided by party political considerations when they put the provision in the Bill, there is one simple way to do it, and that: is to say that all contributions outside the normal running of a company should be published. If they did that, they would in one blow destroy the charges that we are at present levelling at them about political contributions. After all, if their purpose is simply that shareholders are entitled to know what has happened to their money outside the normal running of the business, they are entitled to know what is happening to their money over the whole range of outgoings and not just in one limited direction. I hope that what appeared to be nods from the benches opposite indicate that the suggestion that I have made will receive sympathetic response.
The other point that I should like to make before coming to the principal and technical one which has led me to speak today is about the divulging of exports. It is not a very serious one in itself, although I am afraid that it can lead to a certain amount of unfairness and is probably calculated to do so for reasons which were given earlier by other hon. Members on this side.
If we accept that the purpose of the Bill is to give the maximum information to investors to help and guide them in their investments, it is not fair to suggest that the average investor is very worried about the percentage of any firm's business going to export. What he is interested in is whether he is investing in a financially stable company with a fair degree of profitability.
The need for the Government to know more about exports and the relative amount of exports in any firm's business is quite understandable, but it should not find a place in the Bill. Instead, further information should be given to the Board of Trade, for publication if necessary. Certainly in the Bill I cannot see how divulging the percentage of exports

in a firm's business can be said to be a guide to private investors about whether it is a good company in which to invest money.
In advance of the only other point which I wish to make, I ought to declare an interest in that I am going to speak on a merchant banking point, and it is well known in the House that I have a close connection with a leading merchant bank.
Having made that technical declaration, I do not think that what I am going to say is guided by any interest from the point of view of the success or otherwise of merchant banks. I am impelled solely by considerations of a certain class of bank being able to continue to play a significant rôle in the earning of foreign currency overseas, which is important to the country whichever Government are in office.
The expression "merchant bank" is one which to some extent has been loosened in its application over the years. It is amazing how many people lay claim to the title "merchant banker". However, I am talking of the more limited class of accepting houses. I make a special plea to the Minister to see if he cannot meet a point which was understood in the Jenkins Committee, although I realise that there was a minority Report, and which has been appreciated by other senior people in the financial world who cannot be judged to have any personal financial bias. I do not want to appear to be lecturing the House, because that is always a danger if one is engaged in business. I will do my best to point out why I feel that special treatment should be afforded. My hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) and the hon. Member for Heywood and Royton (Mr. Barnett) have both taken a different view, but it may be that they were talking generally in terms of banks and not quite dealing with the very specific class with which I am dealing.
One of the rôles of merchant banks traditionally, for decades, over a century, is their ability to put a certain allocation to what are called hidden reserves before they declare a profit. That has gone on for a very long time, and there is no sinister reason for it. It is simply because accepting houses and international merchant banks, by their very method of


carrying on business, are bound to take many more risks relative to their resources than are the clearing banks. For that reason, when things go well they enjoy greater profits relative to their resources, and vice versa.
The word "bank" throughout the world contains an image of stability. If in future our international banks which are engaged in transactions should fluctuate widely from month to month and almost year to year, which is what will happen if the exemption is taken away from them, they will appear in a disadvantageous position compared with their opposite numbers on the Continent, which will retain the exemption after the Bill is passed. All I ask is that the Board of Trade should look favourably on this limited and particular class of banking houses. If they are forced to publish fluctuations which, at certain times, can be very wide, they will be placed in a distinctly disadvantageous position compared with their overseas competitors.
At present, it is well known that the City of London and those institutions which it comprises are finding it an increasingly competitive world in which to operate, because of the growth of not dissimilar institutions in other sophisticated countries on the Continent, in the Commonwealth and elsewhere. I suggest that this is the worst possible moment—when it is necessary for us to continue to earn a high rate of overseas earnings—to do anything to worsen the position of those institutions which are playing a notable part in preserving this aspect of the City of London's earnings.

8.0 p.m.

Sir Tattoo Brinton: I should like to refer back to a number of interesting and thoughtful speeches made by hon. Members opposite who unfortunately, but wisely, have, I imagine, gone to have something to eat. It was pleasant to see those old faces so familiar to us during the long nights on the Finance Bill back doing business at the old stand. One of the things which I found interesting in their speeches was the general acceptance of a theory which I think is open to question. That theory simply is that disclosure, in itself, is automatically good and that its justifica-

tion is that it is a spur to efficiency and enterprise.
I have noticed that in most of the speeches in which this point was put—for instance, those of the hon. Members for Birkenhead (Mr. Dell) and Heywood and Royton (Mr. Barnett)—this standpoint was taken, but they did not explain why it is that disclosure in itself, whatever the other arguments in its favour, automatically promotes a higher standard of efficiency. Presumably, this is based on the idea that most of the companies in this country who can be said to be important to our economy and our success in business and commercial life have a great deal to hide and are falling down on the job.
One of the arguments which might be advanced against this point of view is that the industries which operate most in the glare of publicity with public examination of their every managerial problem are, of course, the nationalised industries. I wonder whether right hon. and hon. Gentleman opposite would like to hold those up as examples of industries which are contributing most towards our exports and the growth of our economy. I fear that there are many hon. Members, anyway on this side of the House, who would contest that very strongly. In other words, does publicity in itself produce some wonderful spur to and elixir for enterprise? It does not seem to me that it does.
We should examine this principle further in the context of the two sorts of companies about which a great deal has been said this evening. One is the very large enterprise quoted on the Stock Exchange with a large capital value and a large turnover. The other is the relatively small company, examples of which are private companies not quoted on the Stock Exchange, close companies, family companies, right down to the very smallest form of limited company. There is a certain difference between the two types.
In the big public company, the spur to success is, of course, that its business is very well known. The disclosures provided for in the Bill will not greatly add to the knowledge which the Stock Exchange, the public and the shareholders have of these companies. I agree that it will add something, which is


perfectly justifiable, and I have no objection to it, but if the Bill forces these companies to divulge some relatively minor facts, namely their total turnover, export performance and directors' emoluments—and they give the total of directors' emoluments anyway and only a little more information is wanted—they will not be goaded to a great additional excess of energy over what they already show. The facts are plain to read.
The only significant figure which will be produced by the Bill in future is the turnover figure. This, of course, is the law in America. I shall speak later about turnover figures, a point which no hon. Member has made, as I am not certain that those figures are, in themselves—in this context—as significant as they should be.
In the meantime, will these disclosures promote efficiency, as many hon. Members have suggested? Does the House think that the myriad small companies which have been mentioned today—one hon. Member said there were 400,000 private exempt companies—will be made the more efficient by the disclosure of details which may be extremely embarrassing to them?
I am returning here to a subject which has been very well ventilated on both sides of the House—the possible difficulties, embarrassments and even dangers to very small companies of being forced to disclose figures which at local level will have an undue significance, both in relation to their general standing in their own communities and also in relation to competitors who may these days be much bigger and more powerful.
I do not believe that the disclosure of these figures by small companies will contribute one iota to their greater efficiency. I think that it will lay them open to a great deal of pressure—not only commercial pressure, but pressure of a quite different nature, perhaps political and social. It might be said, "Look how much money he makes." He would be help up because he had to publish the full facts of his income and turnover. This can apply to a small local company, consisting perhaps of only two or three small shops in a town. Everybody will know its business.
Is that what we want to do? Was this the Government's object in framing the Bill? This is an undue invasion of the

privacy of that very large number of companies which have so far—I think rightly—been allowed to keep their affairs reasonably to themselves. The absurd position arises that, so long as a man who runs a substantial business and builds up a substantial income and capital value—perhaps a big farmer—remains in business on his own account or in a partnership, he can keep his affairs as secret as anybody else who does not happen to have the misfortune to be a public servant.
However, the moment that he turns his business into a limited company, his personal affairs and those of the enterprise which he runs immediately become public knowledge for all the local people round him, as well as all his competitors. This is an invasion of privacy, which goes far further than it need go.
I hope that, in Committee, we shall be able to achieve some agreement with the Government to mitigate at least this effect on the smaller business. One sees this very much at local level. One constantly sees the small shop or medium-sized shop being bought out by a big national chain of stores and losing their individuality. This practice is altering the whole face of our society. A certain measure of independence is destroyed every time this happens. Surely we should not seek to facilitate this process by making the affairs of these individual businesses easily open to the very large octopi which exist in this country—and there are many of them—and all hon. Members in their own localities can see how strong the tendency is.
This may be regarded by the Government as a good thing. Certainly some of their measures have tended to imply that greater centralisation is a good thing in itself. It is assumed to be more efficient and it is also assumed to be politically more desirable. This is a question which the Government have to answer in an almost philosophical context. Do they visualise that small units of production or distribution are bound to be inefficient and in the long run what they might call anti-social and therefore ought to be at least mildly discouraged, or do they think that such units should be kept alive?
Personally, I have very strong feelings about this. I maintain that one of the tendencies which we ought to fight


is the destruction of individual independence. Every time the small business or small shop is bought out by a bigger, or even a very large combine, one independent business is destroyed and with it one independent management and probably at the top one independent man. For that is substituted the management of a man who is responsible to somebody else. From then on there is no little centre of independence. This may be a small, but it is an important consideration with vital social and possibly political implications, and it is about the political implications that I have my darkest suspicions.
I suspect that such independent people are difficult to deal with. They are not easily dragooned. They are independent people, what used to be called "master men". They stand for the right and ability to look anybody in the eye and say, "No." The moment that a man becomes employed, particularly by somebody who does not live in the same place as the employee but descends from a headquarters from time to time, he cannot be as independent as he used to be, and we lose something of social value in the community.
I am sorry that I have somewhat digressed, but the Bill severely affects such small enterprises. The case has been very well put from this side of the House and, to some extent, from the other, and I hope that the Government will consider what has been said and that in doing so they will not forget the value of the £ sterling. Nowadays, a small business may be worth a startling sum, for £100,000 is very little these days, although hon. Members opposite do not always remember that. The limit should not be so small as to leave out many valuable businesses which should be protected but which might have a substantial value and a substantial number of shareholders.
I have protested against the disclosure of directors' emoluments. I cannot see what the shareholders need to know about directors' emoluments other than the total. Why single out the chairman and, by implication, especially in the small companies, individual directors? If there are three or four working directors in a company, it will be fairly obvious, by the time one has sorted out the ladder at £2,500 a rung, how much each gets. If

the shareholders know the total, they can decide whether they are getting value for money. It is highly offensive to single out individuals and I suspect that the real reason is not to protect the shareholders.
As for the protection of the public; has the public the right to be able to point the finger at one director as against the others and say, "We do not think that he can be worth it; he is down at the local every night and we know him"? Is this proposal intended as a further method of pulling down those who are in important positions in industry, or even very lowly positions, and who will be subjected to all the methods of publicity with which we are all too familiar?
Many of my hon. Friends are too prone to accept this proposal, because they see it in the context of the giant companies whose executives are almost in the position of civil servants. These are men of such eminence and importance that there may be some argument for saying that the public has a right to know their salaries, but we should remember that until the final objectives of the Labour Party are carried out, namely, the old Clause 4 and nationalisation of everything under the sun, we still live in a society in which many industrial and commercial enterprises are owned by the shareholders. The shareholders and not necessarily the general public have the right to know. The comparison has been made with admirals and generals and civil servants, but they are paid by the public at large so that the public are shareholders in the Army and Navy and Air Force and Civil Service and, for that matter, the nationalised industries. It is a twisting of logic to try to pretend that the two groups are the same.
Much has been said about the singling out of political contributions. We are quite aware of the reason for that. When one looks at the thinness of the Bill, one must assume, as was very well expressed in the Gracious Speech—this was the only aspect of the Bill which was mentioned in two Gracious Speeches—that Clause 16 is the core and centre of the Bill from the Government's point of view. The time which the Minister of State spent discussing it reinforced that impression.
Some time ago, the Economist made a very sensible comment on the issue of how parties raised their money. By implication, it advised the Labour Party


not to make this rather shabby attempt to cut off a source of supply for its political oponents. It made the valid point that although they are not recognised in our constitution or law, political parties none the less exist. They are an essential part of our democracy and they have to have some money to play that part. The problem is to make sure that all parties, on the Government side or this side of the House, or in that part of the House where you used to sit, Mr. Deputy Speaker, are not discouraged from raising money which is the only way in which they can exist and be able to maintain proper research departments and the facilities for the formulation of policy.
It does not well become a party, which draws such a large proportion of its revenue from the-trade unions which, under the present contracting system, obtain a great deal of money from people who give it straight from their own pockets, often unwillingly, to try to put its oponents on the spot. Let us not be too polite about these things—we all know that this is a ramp. To be a little controversial, it is one of the unfortunate things about the Labour Party that when in power it always uses that power to try to alter the rules of the game. We have not forgotten the abolition of the university seats, for instance, and we wait to see what is to happen about the Northern Ireland seats.
I want to make what I hope will be a constructive comment about using turnover as a method of determining the success of a company. Although it is a widely accepted measure, presumably it simply means the total sales of an organisation, company or group, split into different types of product. Rather than a somewhat false method of measuring the size of a company, I wonder if the Government have thought of using value added instead of turnover. Although I have always been an advocate of a value added tax, I am not dealing with that on this occasion.
Consider an extreme example—a manufacturing jeweller who is selling from his little workshop £100,000 worth of brooches, watches and rings but who has had to buy £85,000 worth of stones and other materials. His value added is only £15,000. He therefore has a small business which, measured in terms of

sales turnover, looks much larger. Conversely, one might consider any business with a very small bought out content but with an enormous amount of work, such as an extractive industry. The turnover in such a case nearly represents the actual size of the undertaking. I therefore suggest that the use of turnover for the purpose the Government have in mind is open to criticism and I hope that the Minister without Portfolio will comment on this when he replies.
This has a real relevance in various industries. Some highly verticalised companies will show an apparently high level of profit in terms of so called turnover—which is, after all, the value of their final sales—but where they are not verticalised they will show a lower return because the vertically integrated company is a much bigger undertaking. If the Government intend to throw all these figures to the public so that they may be well informed, the statistics must be disseminated in a way that is not misleading.
I am associated with a carpet manufacturing company. Perhaps I should have declared this interest earlier. One might get one carpet manufacturer who also spins his own yarn. If he is a yarn spinner—I do not know why hon. Gentlemen opposite are smiling—as well as a weaver of the carpet he is manufacturing his business will show a higher ratio of sales than a similar business which is not engaged in yarn spinning. The simple value added basis would give a perfect comparison between the two companies. I trust that this will receive the attention of the Government and, perhaps, we can consider the matter further in Committee.

8.24 p.m.

Colonel Sir Harwood Harrison: I must at the outset apologise for intervening without having heard much of the earlier discussion. I never like taking part in a debate without having heard the previous speeches. However, with other hon. Members I arranged some time ago to see a certain new enterprise. Parliamentary business was announced after that arrangement had been made and, as is too often the case, one finds that one is supposed to be otherwise engaged when a debate in which one would like to take part is to take place. I have been lucky enough to be called tonight, as a result of which I will be brief because I imagine that many of the points I could make


have already been made. I am sure, however, that the Bill has, on the whole, been welcomed by my hon. Friends. My criticism of it is that it goes nothing like far enough. Usually we get legislation dealing with companies only once every 10 or so years. On this occasion the interval has been longer.
I have been associated for more than 30 years with small companies. I therefore have an overall picture of their problems. I believe that certain people are trying to shelter behind the £100 company and using it to their own advantage and not to the advantage of the trade, the public or, perhaps, their creditors. I have noticed over the last few years that legislation has tended to act against the smaller company—be it the family-owned or other small firm—and in favour of the bigger concern which is able to place £2,000, £3,000 or even £5,000 worth of machinery behind every man employed. This is not easily done by a smaller company. Perhaps this trend against the small firm is a trend of the times because, for example, the service that such a company can give cannot compensate for the greater development of the larger organisation.
One need only think of the many extra charges that are placed on businesses today. I recall a Measure which was passed when my party was in power, and although we did not disagree with the setting up of the Apprentice Training Scheme under that legislation, that scheme has caused considerable additional expenditure to the engineering trade. One small firm with which I am associated has had to spend £5,000 in one year in this connection, which, for a small company, is no little amount. There has also been a big increase in rates. I suggest, therefore, that we direct our attention to making sure that we do not kill the goose that lays the golden eggs, because it is from the profits of these companies that we pay for our social services. Perhaps the attention of the House is sometimes directed too much to the social side—to seeing that those who can develop large businesses are able to go ahead. We must not, at the same time, forget that today's biggest concerns have resulted from the enterprise of a few men 100 or 150 years ago. It is not so easy these days for the grandsons

of those men or any young man with ideas to get a business going.
I will not say much at this stage about the declaration of directors' emoluments. My experience is that the shareholders do not care two hoots how much the directors are getting as long as good profits are being made. The complaints come when profits are low, even if the directors are getting low salaries.
I am particularly concerned about the agricultural industry. There are many farmers in my scattered constituency and a number of them formed into small companies in years gone by and are now worried about their future, particularly in the light of the policies of the party opposite. With a greater number of farms being held in fewer hands and the smaller farms being forced out of business, this is a dangerous trend, particularly when it is due to the operation of company law.
I again apologise for having intervened without having heard the earlier discussion. I have no doubt that the points I have made were made earlier by hon. Members. I hope that I will be a member of the Standing Committee which considers this Measure, when I will want to go into these matters in greater detail.

8.28 p.m.

Mr. Ben Ford: I was tempted to speak in this debate by the remarks of the hon. Member for Kidderminster (Sir T. Brinton), but as he has now left the Chamber it would not be very enlightening to him if I replied to some of the things he said. Nevertheless, I apologise to the House and to the hon. and gallant Member for Eye (Sir H. Harrison) for not having been in the Chamber for as long as I should have been before seeking to intervene.
I am mainly concerned with the provisions of Clause II, which deals with the status of accountants under the Companies Act. We all know that certain provisions are made in Section 161(1,b) of the 1948 Act with regard to the qualifications of auditors to render services to companies, both private and public. We have heard great gusts of apologia from the other side of the House on behalf of many small companies and their positions, and I want to draw attention to the position of the


accountants, many of whom are not members of the chartered institutions, who service those small companies.
Since the passing of the 1948 Act it has seemed that a net has been gradually closing around those small accountants who are not members of the chartered institutions; and that the present provisions intend to draw the net still more tightly. Dealing with Clause 11, the Explanatory Memorandum states:
The Board of Trade will no longer be able to authorise a person to be auditor of a company simply because he practised as an accountant before 6th August 1947.
With respect, I would ask precisely what that sentence means. Does it mean that the "old boy" network is further combining to squeeze out those accountants who are not members of the chartered institutions; or that the three associations which are at present excluded are to be recognised by the Board of Trade?
I hope to receive a favourable reply on this point, because I hate to see the small man being squeezed out of business. It may well be that this matter will be discussed in far greater detail in Committee. Of one thing I am certain, and that is that the hon. Member for Nottingham, South (Mr. William Clark), who will, I understand, reply for the Opposition, will have some sympathy with the point.

8.32 p.m.

Mr. Derek Page: My main criticism in what is otherwise a general welcome to the Bill relates to an odd omission. The Bill provides for the disclosure of the proportion of turnover of a firm in exports but makes no mention of the proportion of money spent by a firm on imports which, to me, seems to be at least as important an aspect.
It is very important that a company buying its raw materials and half-finished goods should know their source as accurately as possible. It helps in the efficiency of the company's own planning. If a company relies on a good steady flow of good quality, intermediate, half-finished products, this knowledge is essential for its future planning. It must take into consideration, for instance, the quality of the products it buys. Many products are perishable and, plainly, it would be less likely to pay a company

to buy imported goods if goods of equivalent quality were available at comparable prices from home production.
Secondly, there is the question of continuity of supply. When goods are imported, stocks must be kept here in order to give anything like the same continuity of supply available from home production. Here, again, there is an advantage in dealing with the home producer. On this ground it is of great advantage to the manufacturer to know the source of his own materials.
Thirdly, there is the possibility of duty changes, with consequent sudden price alterations; greater certainty of stability of prices is to be had from home supplies. Also technical service in modern industry where technology is of ever-increasing importance and the availability of expert technicians to give advice and assistance where technical troubles occur, is of the greatest importance and increasingly important. It is much more difficult to get rapid technical service if the goods are imported.
For all these reasons, it is at least as important that firms should disclose the proportion of their turnover involved in importing as is in exporting. I make a point in regard to large verticle concerns where there is a whole series of manufactures from one product to another. If a company becomes dependent on imported products and is not aware of this, there is a danger that it may find its source of supply drying up because a foreign country suddenly stops exporting derivatives and uses its own material so that none, or much less, is available for industries in this country which have come to rely upon them. For all these reasons, my hon. Friends should consider the advisability of including such a provision as I have outlined.
On the question of political contributions I strongly support the action proposed. If I criticise it at all, it is that it does not go far enough. Being one of those peculiar political animals who believes in a mixed economy and supports private enterprise as well as public enterprise, I support the lightness of companies being entitled to contribute to political party funds. But, just as in the trade unions we have the right to opt out if we wish, those who hold shares in the companies should not only be aware


of the contributions which those companies make to political parties but should be able to opt out of them.
While I welcome the provisions of the Bill as so far provided, I ask whether it gives sufficient protection for shareholders who, as many of us do, believe in the need for a Labour Government.

8.37 p.m.

Mr. William Clark: All of us on both sides of the House regret the illness of the President of the Board of Trade and are very sorry that he has not been able to take part in this debate. We shall look forward to his continued and continual attendance in Committee on this Bill which, from what has been said from both sides of the House, will be an extremely long stage.
This has been an interesting debate on a Bill which is very much smaller than was expected. It has been extraordinary that throughout the debate most of the speeches have come from my hon. Friends on the back benches, far more than from those on the Government back benches, and we have not seen much of the Liberals. The hon. Member for Orpington (Mr. Lubbock) made an intervention, but all he said was, "The year 1862."
This Government, who are supposed to be the great modernising Government of the day, have missed the boat. Despite what the President of the Board of Trade says, there has been national criticism of the inadequacies of this Bill. It is no good the Government saying that this is just a first instalment. It should not be forgotten that it is 18 years since we had the last Companies Act. It is no good the Government saying that this is the first bite at the cherry. As my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) said, we cannot keep on biting at this sort of cherry. We have to settle the business of company law and bring it up to date once and for all.
The Jenkins Committee's Report came out in June, 1962, and the Conservative Government then promised that immediately after the next General Election, if they were the Government, they would introduce a comprehensive Measure to take care of most of the recommendations of the Jenkins Committee. It just so happens that by mischance the Labour Government got in and, after a 16-month

delay and after 13 years in opposition when they should have been thinking about this, they now bring forward this half-baked, disappointing Bill.

Mr. Darling: Will the hon. Gentleman tell us where the words "comprehensive review of company law" appear? If he will allow me, may I point out that there with a similar situation a little while ago when the right hon. Member for Bexley (Mr. Heath) was in charge of the Board of Trade and introduced the Resale Prices Bill. The right hon. Gentleman was criticised for not going over the whole field of monopolies, mergers, restrictive practices, and so on. As this is a precedent, I wonder whether I may briefly quote the words:
Anyone who knows the problems of Departmental life and drafting Bills knows that one could not have drafted a Bill of the size in the time…".—[OFFICIAL REPORT, 6th July, 1964; Vol. 698, c. 146.]
that he had, which was longer than we have had.

Mr. Clark: That may or may not be so. Nevertheless, we would certainly have dealt with the Jenkins Report far more effectively than the Government are doing in this disappointing Bill. It is a disappointing Bill. The hon. Member for Heywood and Royton (Mr. Barnett) did not use the word "disappointing". He said that the Bill has many defects. I agree with the hon. Gentleman. As my right hon. Friend the Member for Seven-oaks (Sir J. Rodgers) said in his excellent speech, this is a Bill on a subject which should have been a non-party issue. It is the national economic survival which is important here. The Government are extremely interested in reform, as hon. Members opposite will agree; but, as far as I can see, they are interested in reform only if it is given some emotional or electoral overtones. This is the criticism we have of much of the legislation of this Government.
No valid arguments or reasons were advanced by the Minister of State in regard to the Government's idea about small businesses, for example. I trust that the Minister without Portfolio will be a little more forthcoming. As many of my hon. Friends have pointed out, this could be another attack on the small man, the small family business, the managerial executive. It may be an attack on privacy,


for political reasons. These are the questions on which I hope the Minister without Portfolio will say something.
This is a short Bill dealing with some of the recommendations of the Jenkins Committee, but I suggest that the Government have got their priorities wrong. It was all very well for the President of the Board of Trade, at his Press interview, after the Bill was printed, to say that he thought that public opinion would accept the priorities as right. I find it amazing that not one political or financial journalist or economist has agreed that in the Bill the Government have got the priorities right.
The Jenkins Report was a comprehensive survey—or, if the Minister of State does not like the word "comprehensive", an exhaustive survey—of some 216 pages. It had 41 separate lists of recommendations. The Government now offer the country a Bill containing 45 Clauses, running to 60 pages, most of it filled with what are irrelevancies to our economic structure and company law. The Government day by day give me, and I am sure the rest of the country, the impression that they are only capable of scratching at the surface of any problem and the legislation they introduce creates far more injustices than it tries to remedy.
The Minister of State mentioned that it has been stated, although he did not necessarily agree with it, that the Bill will be remembered more for what has been left out than for what has been put in. [Interruption.] When the Minister of State reads HANSARD tomorrow I think he will find that he said that the critics have said that the Bill will be remembered more for what has been left out than for what has been put in.
I suppose one of the greatest omissions is the question of shares of no par value. In recommendation 34 of the Jenkins Report the issue of shares of no-par value was recommended. Why was this left out of this Bill? I hope the Minister without Portfolio will tell us. Of course, it is easy to make political capital out of the fact that one takes a company with, say, £100,000 original capital and a 25 per cent. dividend is paid. But the dividend is paid on the capital employed, which is the original capital plus the ploughed-back profits and reserves. It could be

that with a £100,000 company the capital employed is £500,000 and a 25 per cent. dividend is really only a dividend of some 5 per cent. on the original £100,000. If we had shares of no par value this would obviate this nonsense of declaring dividends of a high rate on a fictitious figure set 50 years ago, or whatever it was.
The Government use some of these economic and accountancy terms. I used the phrase "capital employed". This is a far better way of defining a dividend for any enterprise if one takes capital employed. The Government are not averse to using some of these terms when it pleases them. They talk about the difficulties of discounted cash flows when talking about cash grants. It is far more difficult to understand "D.C.F." than it is to understand "capital employed". I should have thought that the Government must tell the country why, at this stage of their company legislation, they have not included the question of shares of no par value.
As many of my hon. Friends have pointed out, one of the glaring omissions from the Bill is the question of nominee shareholdings and dealings by directors. This really must be disclosed. I think hon. Members opposite, whom I know take a great interest in these matters, would wholeheartedly agree that it is a glaring omission that nominee shareholdings and dealings by directors have been excluded, despite the fact that the Jenkins Report in paragraph 29 dealt fully with these problems and recommended accordingly.
Why is there this reticence on the part of the Government? The Minister of State said, "If during the Committee stage we can get some suitable Amendments and if the Opposition co-operate, we will be happy to deal with these matters." Really, what a way to run a country! Here we have a Government Bill and the Government invite the Opposition to improve it. What is the matter with this Government? As my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) said, this is not the way to run the country. This should have been in the original Bill.
Another matter that has been omitted is the question of service contracts of directors. This is very material when one looks at the accounts of companies. It is all very well to say that the directors


get £X. It is far more relevant to the future of the company to know what a director's contract may be. Why should not these matters have been put into the Bill? I remind the House—including the Minister without Portfolio, and the Chief Secretary to the Treasury whom we are delighted to see here—that under the Corporation Tax regulations directors of companies have been given far greater powers in relation to the declaration of dividends.
The Chief Secretary said during the Finance Bill debates that if they pay less in dividends they pay less tax. We argued that Corporation Tax would activate unfairly against companies. The Government cannot have it both ways. They cannot, on the one hand, say that directors should be able to decrease their dividends in order to save tax and, on the other hand, not let directors say what their service contracts are, what their dealings are and so on.
My hon. Friend the Member for Harrow, Central (Mr. Grant) raised the question of non-voting shares. There is no mention of them in the Bill. No doubt various hon. Members have different ideas about them. The Jenkins Report has different ideas. As is well known, there was a minority Report, but it is possible to remedy this matter without legislation, and in parenthesis I would say that if non-voting shares were not quoted on the Stock Exchange we would find that the question of non-voting shares would disappear. This brings into the debate the difference between public quoted companies where one can do something with non-voting shares and the present type of private exempt companies.
Obviously, public quoted companies must disclose, and other companies should disclose if those companies are a cloak for some other activity. There are many private exempt companies which control huge public companies. It is true that Clause 21 deals with the question of re-registration as unlimited. I mention this in case the Minister without Portfolio argues against me that a family business can become unlimited under Clause 21. That is absolutely true and the Jenkins Report deals in paragraph 78(g) with re-registering as unlimited.
There is the recommended restriction of the number of members of that re-

registered unlimited company to 20. My hon. and learned Friend the Member for Darwin (Mr. Fletcher-Cooke) made the excellent point that this hits small companies, medium-size companies and the professional firm. I am sure that the Chief Secretary to the Treasury would agree with me about the restriction imposed on many professional firms, which are very large, in accountancy, law and on the Stock Exchange, and conducting international business, because of this 20 limit put on their partnerships. If the point is that these small companies can become unlimited, there is still this restriction to 20 and this should have been dealt with in the Bill.
The list of omissions in the Bill can be extended, but I think that I have said enough to show that the Bill is inadequate in many senses. The hon. Member for Bradford, North (Mr. Ford) made a good Commitee point when he spoke about accountants, but I would point out that accountants have been and are recognised by the Board of Trade and this has nothing to do with trying to keep a cloak round accountancy and creating a closed shop. Professional people must have certain academic standards. I was amused when the hon. Member said that he had been tempted to speak by remarks made on this side of the House. My impression was that he had been tempted to speak by the pressure of the Whips on his own side. However, some of these proposals need careful scrutiny in Committee.
One point which has come up clearly in the debate is the difference between the small company—the family company, and the public company—the quoted company. We are not prejudging the issue. The Jenkins Report dealt with this, but the Minister of State, in the course of his speech, spent no time at all in trying to advance any reasons why the Government had accepted the fact that the same rules should apply to the small family businesses as to the great giants of the country.
I would remind the Minister without Portfolio that there are at the moment upwards of 400,000 private exempted companies. All these are not family businesses, but we could take 200,000 of them to be small businesses. They are the backbone of industry. Their owners and directors are hard-working and inventive,


and of necessity they must be competitive otherwise they would be thrown out of business. Consequently, they are extremely efficient. This is the argument which the Minister without Portfolio must establish before we can begin to accept that the same principles apply to the public company as apply to the small family company.
The President of the Board of Trade thinks that all companies are the same, but the Economist, on 5th February, had an admirable article on page 525 which had this to say:
But it is a pity that the Government did not use this opportunity to make a clear distinction between companies whose activities are only of private interest to their shareholders and managers, and those large enough to be a matter of public economic concern.
It is from this standpoint that the Govment must advance substantive and convincing arguments for not having a differential. Without a differential in the Bill between these two types of company, there must be disclosure of directors' emoluments and of turnover.
As regards directors' emoluments, we all remember the Emoluments of Top Management Bill introduced by the hon. Member for Stepney (Mr. Shore) in February, 1965. Is the Board of Trade still mesmerised by this wizard from Stepney? Is it so mesmerised that we have to have these emoluments diclosed? Many of my Hon. Friends, together with the hon. Member for Heywood and Royton, have drawn attention to the difficult questions raised by disclosure of directors' emoluments in both small companies and large. Moreover, it can be extremely unfair sometimes to disclose a salary without taking taxation into account. All hon. Members who read it will recall the excellent article in The Times of 17th of this month which showed how badly top executives in this country compare with their counterparts in other countries. This is another factor to be borne in mind when we argue about disclosures.
Hon. Members on both sides of the House have made play of the question whether we should publicise turnover. Will disclosure of turnover damage the small man? Will it not give him cause to fear takover bids? I shall not go over those matters again, but the House will remember the valid arguments put by my hon. Friends. Disclosure may be per-

fectly all right in this country, but we must not forget that we are a country trading internationally. We must do nothing to put our overseas competitors—to say nothing of home competitors—in a more advantageous position because we disclose more than they do.
The President of the Board of Trade has said that export figures are of no special interest to shareholders. I want the Government to think very carefully about the export turnover figures because disclosure can be extremely unfair to a company which, for example, sends most of its products ultimately to the export market but which will have a nil export figure simply because it sells to an end processer. A far more satisfactory explanation must be forthcoming from the Government for what they propose in this respect. Otherwise the country will come to the conclusion that all the Government are doing is trying to prove by unfair comparisons that a company is inefficietn or, as the phrase goes, it failing the nation. If they want to get off this hook, the Government will have to give a far better justification of what they propose.
There are other minor points of criticism. One arises in connection with the division of turnover in relation to profits. The hon. Member for Heywood and Royton, with his accountancy knowledge, will agree with this. The division of turnover with profits on each is not to be audited and is not to be certified by the accountant of the company but it will go into the directors' report. Anyone who knows anything about business knows that, taking the total profit and total turnover, the profit on each can be divided by the number of components. One can alter the profit on any of the divisions by allocating to a division more of the overheads of the company. This makes it meaningless. We shall produce all these figures, which will presumably be of use to the Board of Trade, but they will not be certified by the company's accountants and nothing it to be stated about how the overheads have been allocated.
The Bill states that where it is felt that some of the information shall not be disclosed in respect of overseas subsidiaries, with the Board of Trade's permission—here we get back to the gentlemen in Whitehall—disclosure need not take place. What is the position of


subsidiaries of overseas parent companies operating in this country? Are they somehow to be made to disclose? My reading of the Bill is that they will not disclose anything if they are not registered in this country, whereas our own companies competing against them will have to.
As my hon. Friend the Member for South Angus said, the Government could have dealt with all these accounting points by invoking Section 454 of the Companies Act, 1948. I notice the Minister without Portfolio shaking his head. Whether he agrees or disagrees I do not know; I hope he agrees. He will find that all these things could have been enacted by Statutory Instrument. Why is there all this paraphernalia in the Bill? Is it to cloak the political bias in the Bill? Are the Government working on the principle that a spoonful or sugar makes Labour medicine go down? Are the Government trying to cloak their real idea and political bias by putting in a little of Jenkins?
There are many other omissions, but these will be examined in Committee. There is no mention of depreciation computations, a subject very relevant to the capital employed and the profitability of a company. How is depreciation computed? There is no mention of it. There is no mention of protection of minority shareholders, half-yearly accounts, a time limit for submission of accounts and the rights of creditors in a conversion from a private exempt company to an unlimited company.
My hon. Friend the Member for Torquay (Sir F. Bennett) referred to the uncertainty on the part of our banking institutions. I remind the Minister that the merchant banks and insurance companies earn about £170 million a year in foreign currency, which is as good as exports, but they are left uncertain whether they are to disclose or not, and the Government must resolve this uncertainty. The Bill states that the Board of Trade will decide whether disclosure will be made, despite what the Jenkins Committee said in paragraph 407. The Government have for some quirk—nobody knows the reason—accepted the minority Report of the Jenkins Committee.
The Bill seems less concerned with modernisation than with witch hunting, which brings me to the political contribution. The Minister of State dealt with this fully—more than fully. He spent 17 minutes of his 37 minutes' speech on the political contribution. Although it is maintained that the political contribution is only a minor aspect of the Bill, the Minister spent at least 17 minutes on it. Without arguing the merits or demerits of the political contribution, the important thing is the definition of "political", as I am sure the Minister without Portfolio will agree.
What does the word mean? If one asked a Member of Parliament, a trade unionist, the man-in-the-street or a lawyer, one would get different answers. This will be a bonanza for the legal profession, and I say that with great respect to and without aspersions on the profession of the Minister without Portfolio. The word will lead to considerable trouble in definition. No doubt the hon. Gentleman has looked up the definition in the Oxford Dictionary. It says
Having an organised government or policy…Said also of bees and ants.
I hope that the Minister without Portfolio, who has great knowledge of legal interpretations, has an interpretation of "political" ready.
Another aspect—and here again I do not argue the merits or demerits—is the purpose behind disclosure. We all remember a speech by the Joint Parliamentary Secretary to the Ministry of Technology on 22nd January, 1964, about firms paying political contributions. He said:
Some of us are determined to hit back where it hurts.
The Jenkins Committee dealt with this question of political contributions and in paragraph 51 clearly said that they are a constitutional and not a company issue. This is where the Opposition part company with the Government. Jenkins said that this is a constitutional matter but the Bill legislates for companies. Why, therefore, is this provision in the Bill?
The President of the Board of Trade said on 4th January, according to the Financial Times, that political contributions were of no special interest to shareholders, but I agree with my hon. Friends that, when shareholders realise the small


sums that are given to those organisations against more and more State interference, they will be up in arms and contributions to such organisations will rise.
The Bill is based on the Jenkins Report, which a Conservative Government would have implemented far more fully. Parts of the Bill are vicious, with political overtones and undertones. It is not a great modernisation Measure but an amateurish approach to a problem which needs dealing with once and for all. What must be our judgment?
The judgment is that the Government are anti-private business—there is no question of that. One can list their actions in support of that view. There has been Corporation Tax, particularly hurting family businesses—and one remembers that the Minister of State, Department of Economic Affairs, said about that, "And a good job too." Then there is the distributive effects of Corporation Tax, which again will hit the small business.
We now have the Industrial Reorganisation Corporation, which is creeping nationalisation, and the nationalised industries having more power to manufacture. [Laughter.] It is all very well hon. Members opposite to laugh but it is the small business man who will suffer when subjected to the competition from these large organisations.
Now there is to be the discriminatory effect of investment grants—and we are still in the longest credit squeeze the country has ever suffered. We have thus already had from the Government more and more unfair interference with business decisions. They are all hitting the small man. What is the Government's policy towards the small man? Is it to drive him out so that only the giants are left because it is much easier to deal with the giant by either nationalisation or control? This is a disappointing, vindictive and inadequate Bill. It cannot assist the national interest, because some of its Measures will not do so. However, some parts of the Bill are welcome because they follow the Jenkins Report and consequently we shall not oppose the Bill tonight.
The Minister of State invited the Opposition to amend the Bill. The Prime Minister himself has made it quite clear that he does not like constructive opposition. He said that in the Albert Hall

about the Finance Bill, it will be remembered. Let me make it perfectly clear that no threats or talk of tomfoolery will deter us from opposing those parts of the Bill which are irrelevant and we shall as usual do our utmost, without fear or favour, to improve the Bill in Committee.

9.11 p.m.

The Minister without Portfolio (Sir Eric Fletcher): I should like to begin by thanking the hon. Member for Nottingham, South (Mr. William Clark) and other hon. Members who have been kind enough to refer to the regrettable absence of my right hon. Friend the President of the Board of Trade. It is a matter of regret to him that he cannot be here tonight, but I am sure that he will read with great interest everything which has been said in the course of the debate, and I am sure that he will be particularly glad to observe that, despite the amount of political capital which the hon. Member for Nottingham, South endeavoured to induct into his speech, the hon. Gentleman and his hon. Friends are to support the Bill.
I hope that I shall not be misunderstood if I turn at once to Clause 16. I hope that it will not be thought that I am giving it undue emphasis. I share the view of the right hon. Member for Altrincham and Sale (Mr. Barber) that it is by no means the most important Clause. It has been considerably misunderstood, but such misconceptions as have arisen can easily be disposed of.
I find it very difficult to understand why the hon. Gentleman and the right hon. Gentleman should have used adjectives such as "mean" and "vindictive" to describe this Clause. The underlying assumption in their speeches, as in those of other hon. Members, has been that the Clause is directed against the Conservative Party. There is nothing about the Conservative Party in it. Clause 16 is quite objective and does not discriminate one way or another.
It provides that a company shall disclose money given for political purposes. That applies to money given to the Conservative Party, the Liberal Party, the Labour Party or the Communist Party. I find it very difficult to think how it can be said that this shows any vindictiveness against the Conservative Party, unless the assumption is—and no one has


suggested this—that when companies give money for political purposes, they give it only to the Conservative Party. If that is the background to the objection, and it has not been suggested expressly, I should have thought that that made it all the more desirable that such disclosures should take place. In so far as any company makes a contribution to the Labour Party, we have not the slightest objection to that being disclosed in the company's accounts. As far as I know, where any company makes a contribution to the Liberal Party, no Liberal representative has said that he has any objection to disclosure in the company's accounts.
I therefore ask myself why it is that the Conservative Party and only the Conservative Party should see some subtle injustice in this provision. It is completely all-embracing in its requirements. The reason for it is that shareholders are entitled to know how the money of a company is spent. If it is not spent for the purely commercial purposes for which the company is incorporated—

Sir F. Bennett: Sir F. Bennett rose—

Sir Eric Fletcher: The hon. Gentleman the Member for Torquay (Sir F. Bennett), like a number of other hon. Members, including the right hon. Gentleman the Member for Reigate (Sir J. Vaughan-Morgan), my hon. Friend the Member for Stepney (Mr. Shore) and my hon. Friend the Member for Birkenhead (Mr. Dell) has said that if this obligation under Section 16 were extended from an obligation to disclose contributions for political purposes to include charitable, educational and research purposes, then he would be in favour of it. As far as I am concerned, and I will have to consult my right hon. Friend, that seems to be a sensible suggestion.
There has been a lot of misunderstanding about this. The hon. Gentleman the Member for Nottingham, South quoted, quite inaccurately, as did the right hon. Gentleman the Member for Altrincham and Sale, paragraph 51 of the Jenkins Report. The House should realise that in paragraph 51 the Jenkins Committee was not concerning itself with the obligation to disclose contributions to political parties; it was concerned with the much wider question of whether donations for political purposes should

be prohibited. It said that it was not going into that question because it raised constitutional issues outside its competence.
We are not vindictive. We are not suggesting, as we might have done, and as the Jenkins Committee almost invited us to suggest, that donations for political purposes should be prohibited. That would have been a possible line of action, and I can see myself making a speech in justification of it for this reason—companies are formed primarily for commercial purposes. Their objectives are set out in their memorandum. Certain acts of a company, as the hon. Gentleman knows, are ultra vires. It may be that for certain companies, donations for political purposes are ultra vires their objects and not permitted by their constitution.

Sir J. Fletcher-Cooke: Perhaps they are permitted.

Sir Eric Fletcher: It may be that they could make them, or it may be that they could not. One of the reasons why this applies equally to charitable contributions is that shareholders are entitled to know whether the corporate money they have invested is applied for purposes outside the ordinary commercial object for which a company is founded. If a board of directors decides to make charitable or political contributions, that is information to which not only shareholders are entitled but to which potential investors and the public are entitled. I would have thought that the arguments were overwhelming.

Mr. William Clark: If political donations or contributions are prohibited by the memorandum and articles of a company and the company makes such a donation ultra vires, what is the accountant to the company doing passing the accounts?

Sir Eric Fletcher: I do not know. I am not responsible—

Sir F. Bennett: Sir F. Bennett rose—

Sir Eric Fletcher: May I answer that point? The responsibility for what accountants to companies do is not mine. I am sure that the hon. Gentleman realises, and does not want to take a false point, that this is not a matter which has to be disclosed in the company's accounts. It has to be disclosed in the


directors' report. No duty is put upon an auditor to decide whether the disclosure is right. This is the directors' responsibility alone.
It is no use the hon. Member for Nottingham, South trying to make thunder by saying that there is no definition of a political purpose. Any director with the minimum of common-sense must know whether a particular donation is a political donation. If he is in doubt, then it is his duty to make the disclosure. If he is in any doubt he had much better err on the side of discretion and make the disclosure. That is the whole purpose of this Clause.

Sir F. Bennett: The hon. Gentleman has referred to me and I hope that he will now give way. In the opening part of his speech he said that the justification for this Clause was that shareholders were entitled to know of any purposes, outside the normal business of running the company, to which money was devoted. He now says that he sees no particular objection to extending this outside the purely political sphere. Would he like to say why, if there was no political purpose involved, this did not appear in the Bill in the first place instead of it having had to be suggested?

Sir Eric Fletcher: I will certainly explain this, but I will explain in a moment why many things are not in the Bill which have not been referred to tonight. One of the reasons—I do not think that it is conclusive—is that the Jenkins Committee did not recommend it, and it made some other observations. In view of what has been said on both sides tonight, I am sure that this disclosure should be extended to charitable organisations. I am very glad to have had the assurance of hon. Members opposite that if that is done they will think it reasonable, and I hope that we shall hear no more about meanness and vindictiveness.

Mr. Barber: ; Since the hon. Gentleman referred to me and said that I had misunderstood this part of the Jenkins Report and went on to explain what he thought was meant by paragraph 51, would he explain what he thinks are the implications of paragraph 53, which is the one to which I referred?

Sir Eric Fletcher: Yes. I have just said that one of the reasons why we have not

dealt with charitable donations as well as with all other donations is that in paragraph 53 the Jenkins Committee made it clear that it did not think that it was sufficiently important. But we do think it sufficiently important.

Mr. Barber: Mr. Barber rose—

Mr. Speaker: Order. If the Minister wishes the right hon. Gentleman to intervene, he will indicate so.

Mr. Barber: I gave way five times on this point. All that I wish to say is that the point which I made on paragraph 53 was that it referred to political donations and that it stated that those donations were not of sufficient importance to justify an express general requirement to disclose them. Does the hon. Gentleman agree with that or not?

Sir Eric Fletcher: I think that it is totally wrong. There is not a word in the sentence to justify it. I am sure that the right hon. Gentleman wants to do himself justice. In paragraph 51 the Jenkins Committee dealt with donations for political purposes and said that it would not say any more about that because it was a constitutional matter outside its terms of reference. It went on to discuss in paragraph 52 charitable donations and in paragraph 53 it said that it did not recommend disclosure of charitable donations because it did not think it important enough. I do not think those three paragraphs, read together, can have any other possible construction than the one which I have put on them.
I do not propose to say any more on the subject, because I do not think that it is the most important—[Interruption.]

Mr. Speaker: Order. I have set my face against running commentaries from either Front Bench.

Sir Eric Fletcher: I agree with the right hon. Gentleman. I do not think that this is the most important section in the Bill. I wish to pass from it. I hope that I have laid at rest the suggestion that there was something particularly sinister in its introduction into the Bill.

Mr. R. Gresham Cooke: Mr. R. Gresham Cooke (Twickenham) rose—

Sir Eric Fletcher: I want to get on. I have been asked a great many questions


by Members who have been here all day and have made speeches. I am anxious to answer some of the questions put to me.
I turn to Clause 6, which deals with directors' emoluments. There has been general agreement with the proposal in the Bill that particulars with regard to directors' emoluments should be disclosed. I will come later to the exception which has been raised concerning small companies. The right hon. Member for Altrincham and Sale put a number of questions to me about Clause 6, with which I should like to deal.
I thought that there was some sense in his suggestion that the case for requiring the disclosure of the emoluments of the chairman, who may not be the highest paid director or, indeed, the highest paid executive in the company, is not entirely easy to justify. It is justified on the analogy with the nationalised industries. The right hon. Gentleman said that there would be a difficulty if one attracted duplication of disclosure in the case of a person who was the chairman of a subsidiary company but only an ordinary director of the parent company, and vice versa, and that it might lead to undesirable results. He also suggested an alternative method of disclosing the information so as to avoid the setting out of the various bands, rising by limits of £2,500, within which a number of directors could be bracketed. All of those were very sensible suggestions.
If the Clause about the disclosure of directors' emoluments does not go far enough or is not in the most perfect form—and it does not satisfy all my hon. Friends, particularly my hon. Friend the Member for Stepney—we shall be very happy to consider any suggested improvements of the obligation to disclose in the Committee stage. But I am very glad to know that the principle is accepted.
I was asked by a number of hon. Members, particularly the hon. Member for Torquay (Sir F. Bennett), what was the position about banks. That is dealt with in Clause 10. It will be recognised that the arguments for removing the existing exemption for banks are rather nicely balanced. The Committee did not reach a unanimous view on the subject. The majority said that it seemed to them

undeniable that the exemptions had certain disadvantages. They said that shareholders in banking companies were deprived of information needed to judge the value of their shares and to exercise intelligent control over the board of directors. The right to conceal the size of, and transfers to and from, inner reserves could be used to conceal weaknesses as well as strength. Notwithstanding that, the majority came to the conclusion that the exemption with regard to banks should be retained.
Hon. Members will know that there was a very strong minority recommendation signed by no less than five members of the Committee. It suggested that the matter should be more thoroughly examined and that the banks should be invited to submit their accounts in confidence to the Board of Trade. We were anxious not to make a final decision about this very important matter affecting the confidence of the public in the banks, measuring that against the right of shareholders and investors to disclosure, until the matter had been carefully examined with the banks.
Hon. Gentlemen opposite are complaining that everything is not in the Bill. In a sense, it is flattering that they expect us to have done in about 16 months all the things that they did not do in 13 years of office. [Interruption.] Anyhow, they cannot have it both ways. They cannot complain, first of all, that there are certain omissions in the Bill and, at the same time, ask us why we did not deal with the banks. They cannot complain that we have postponed the introduction of the Bill until we had resolved the question about the banks. Therefore, what we have done is to see the banks and their accountants. They have been good enough to present their books and accounts to us, a decision will be taken, and, in accordance with Clause 10, it will be announced to the House. It will not be a decision by the President of the Board of Trade, as some hon. Members suggested. It will be subject to an affirmative Resolution in the House.
I was asked about the special position of the merchant bankers, in which the hon. Member for Torquay is particularly interested, and of the acceptance houses. I want to give the House the assurance that the special considerations relative


to merchant banks and acceptance houses are fully understood. It need not be assumed that the same Regulations which will apply to any other banks will necessarily apply to them. Obviously, I cannot go further at this stage than to give the hon. Member that assurance.
The hon. Member for Middleton and Prestwich (Sir J. Barlow) asked me a number of questions. There is one relatively minor matter which has not been mentioned and with which I should perhaps deal before we come to the Ways and Means Resolution. It will be ob-served that there are provisions in the Bill, which have not yet been mentioned in detail, dealing with the fees payable to the Registrar of Companies, both on the initial registration of a company and on subsequent registrations. This is a matter of some importance, because very considerable increases in these fees are being made, which I am sure the House will wish to have in mind before it gives the enthusiastic reception to the Bill which it will give in a few minutes.
At present, the fee for registering a company is £2 and the fee increases according to the nominal capital. The maximum fee is £50. The Jenkins Committee recommended that that fee should be increased in every case by £25. We propose that it should be increased in every case by £18.
Every company has to file an annual return. At present, the annual sum payable by the company when it files its annual return is 5s. The Jenkins Committee proposed that that should be increased to £5. We are not going so far as that: we propose that the fee should be increased to £3.
The hon. Member asked me whether we could make an exemption in the case of companies limited by guarantee, because he is interested in a small company. My impression is that it would be difficult to make an exemption in the case of companies limited by guarantee, but I will look into the matter. The hon. Member will appreciate that there are provisions which enable the President of the Board of Trade to deal, with that matter without coming back to the House.
I say that because Clause 26 hereafter enables the President of the Board of Trade, by Statutory Instrument, either to increase or to decrease the amount of

fees payable to the Registrar. These matters are particularly important for my right hon. Friend the Chief Secreretary, because, for a long time, the Registrar of Companies has been functioning at a loss. Whereas—for example in 1961–62—the cost of running his department was £620,000, the receipts from companies were only £394,000, leaving a deficit of £226,000. It has been running at a loss for several years. The effect of these Clauses would be to bring in approximately £2 million a year. Therefore, it will not merely remove entirely the existing deficit in the Companies Office but will provide a very considerable source of revenue to the Exchequer.
The justification for this is that it is desired not merely to make the Registrar of Companies a department which pays its way, but also—again in accordance with the recommendations of the Jenkins Committee—to do something to stop the spate of irresponsible incorporations.
In dealing with companies, hon. Members should remember the great ease with which an individual, at trifling cost, can form a company, can set up a corporate body with corporate status, with all the advantages and privileges of the Companies Acts. The Jenkins Committee pointed out—and this is one of the matters which the hon. Member for Nottingham, South should take into account when he talks about small companies—that many of the 400,000 companies which are registered are completely moribund and that many of them are formed not for the purpose of trading but merely for protection of names or some completely adventitious purpose.

Mr. Charles Fletcher-Cooke: Does the Minister's calculation of £2 million allow for the falling off in the number of registrations which it is his object to produce? Has he assumed that the numbers will be the same as in the past? If not, how many fewer has he assumed?

Sir Eric Fletcher: This is the best estimate that one can make, bearing in mind that this potential increase in fees is intended to act as a deterrent against the reckless, irresponsible formation of companies for purposes which were never envisaged when the Companies Acts were originally introduced. These provisions take account of those companies which


desire registration and desire to renew their registration annually, whereas a large number of companies do not, or do so only because the fee payable is trifling.

Mr. John Hall: There is one point on which I am not clear. I understand the need to discourage the irresponsible formation of companies, and I understand, therefore, that in the first year the cost of registering should be increased. I am not sure why it is necessary to increase the fee for an annual return. Will this establish the principle that every time the Government want the firm to make a return, they will be sure that the cost of administering that return is recovered by fees charged to the company? It is very depressing news for industry, if that is so.

Sir Eric Fletcher: It is not depressing at all. The fee of £3, which is substantially less than that recommended by the Jenkins Committee, is by no means exorbitant as a fee for a company to pay to have the privilege of continuing on the register. Experience shows that a great many companies do not function and renew annually simply because it costs only 5s. It would be a great simplification if certain companies were expunged from the register and if the registry did not have to engage in an enormous amount of correspondence to find out whether the remainder of such companies wanted to retain their registration.
I have been asked many questions about the obligation to make disclosures about exports which is contained in Clause 17. I should preface my remarks by pointing out that—as the hon. Member for Nottingham, South knows—this is not an obligation on the auditors; it is not something which must be stated in the balance sheets. This is for the directors to state in their Report. It should not be equated with the obligations in the Schedule with respect to the details of the balance sheet and profit and loss account.
The idea of getting directors to give these export figures is twofold. First, it will provide very valuable information for the Board of Trade. It may not be as complete as one would like, but it will produce some information. Secondly, it is hoped that it will stimulate those who are engaged in exports to make the con-

tribution, which we are anxious that all companies should make to the export trade. This provision is criticised by hon. Members opposite and by some of my hon. Friends on the ground that some companies are not engaged directly in exporting but make components for other companies which do export. It is, therefore, unfair to those companies.
The answer to these criticisms is simply that any company can state anything it likes in its directors' report. If those are the facts, and if there is a company which is making a lot of components for another company which is exporting them introduced into some other machinery, let that be stated in the directors' report. The more directors say in their reports the better.
It is then said, "But this will be an obligation to comment on exports. Why not say something about imports as well?" We have no objection to that. If a company has been able to achieve some notable result by producing something which was previously imported, it should boast about it, take credit for it and say in its directors' report what has been achieved. Therefore that criticism, like so many others, is ill founded.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. The Minister must choose the hon. Member to whom he wishes to give way.

Sir Eric Fletcher: I choose the hon. Member for Sevenoaks (Sir J. Rodgers).

Sir J. Rodgers: I am grateful to the hon. Gentleman. Since the Bill deals with the corporate affairs of companies and since I have sympathy with the desire to collect figures of exports, would not the hon. Gentleman equally agree that this is totally irrelevant to the Bill and that there are better ways of collecting figures of exports? Why rely on company chairmen, statements and reports for these figures when they can be obtained by other methods? Is this not going the wrong way about the right idea?

Sir Eric Fletcher: I do not agree. These things are not exclusive. The Board of Trade will use other devices and methods open to it to get particulars concerning exports. We want to encourage directors


to give in their reports the maximum information to shareholders. In particular, we want directors, if their firms are engaged on exports, to tell their shareholders and the public what they are doing, whether directly or through components. And if they are doing any other useful jobs, such as saving imports, the more they say about it the better. I cannot see any possible objection to that.
I was asked by the hon. Member for Middleton and Prestwich what was the significance of the word "substantially" in Clause 15. This is an obligation on directors and not on auditors. One of the interesting features of the Bill is that for the first time a direct obligation is placed on directors to supplement the information in the auditors' report by giving a far more comprehensive directors' report than we have had for some time past. In the case of composite companies there will be information about whether there have been diversified interests and an analysis of the turnover and profits in cases where companies are engaged in different kinds of businesses which differ substantially from each other.
I was asked to illustrate whether or not, if a company has various interests, they differ substantially from each other. It is impossible to give a categorical answer which would be applicable in all cases. Directors must decide for themselves. They are responsible people. They will have to formulate the best judgment they can for each company as to whether their operations may be thought sufficiently to differ substantially from each other or whether they are part and parcel of the same operation.
One must concede that there will be difficult cases of judgment, but here again I hope that I speak for the whole House when I say that we have sufficient confidence in the integrity, responsibility and reliability of directors to hope that if they have any difficulty about whether or not to give full information, they will err on the side of giving it and not on the side of withholding it. I hope that that is the attitude and approach to the subject which will be endorsed by hon. Gentlemen opposite.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. The Minister has been generous in allowing interventions. I hope that he will select one now.

Sir Eric Fletcher: It is the turn of the hon. Member for Middleton and Prestwich, to whom I referred.

Sir J. Barlow: I am very grateful. It would facilitate matters a great deal if it were possible to differentiate slightly between different types of industry. I gave the illustration in the textile industry of spinning, weaving, printing, making up and distribution. That can be a horizontal integration in each case. On the other hand, I am connected with a firm that is vertically integrated, and does all the lot. Should this be differentiated in the companies' returns or not?

Sir Eric Fletcher: I would hope that the hon. Member would feel that there was no objection, if he has that vertical integration, to differentiate and give his shareholders and the public the information. I can see no objection to it. The whole object of the Bill on which we are so united is to give people the maximum of valuable information—

Sir Douglas Glover: Sir Douglas Glover (Ormskirk) rose—

Mr. Speaker: Order. The hon. Gentleman has not been in the debate; I hope that he will not intervene.

Sir Eric Fletcher: I must pass on. I am anxious to deal with the substantial point made by the right hon. Gentleman, by the hon. Member for Nottingham, South and by the hon. Member for Sevenoaks, who drew attention, quite rightly, to the fact that we are differing from the recommendations of the Jenkins Committee in so far as we are imposing on non-quotable companies the obligation to disclose directors' remuneration and turnover. It is a perfectly fair point.
Our reason for doing so is this. The Jenkins Committee was at pains to point out that exempt private companies should be abolished; the distinction no longer obtains between exempt private companies and other companies. If it had been possible to maintain that distinction there would have been a case, I think, for making the distinction that hon. Members want but, as has been pointed out, the attempt made in the 1948 Act to decide what companies were and what were not exempt companies, failed.
A large number of companies probably claimed to be exempt private companies


that were not entitled to exemption. A number of companies were in a very dubious position, and, as the Committee said in paragraph 57 of its Report:
…the present definition is so complex that there is little doubt that many companies, which at present claim and obtain exemption, are not entitled to it.
Therefore, we are carrying out the recommendations of the Committee by abolishing that distinction.
It is perfectly true that it was suggested that there should be introduced a new differentiation, namely, between companies whose shares are quoted on the Stock Exchange and companies whose shares are not quoted on the Stock Exchange. That distinction is retained for the purpose of the audit provision.
If I might just say in parenthesis at this stage, I have not forgotten the point made by my hon. Friend the Member for Bradford, North (Mr. Ford). The Bill does not go the whole way that he would perhaps like, but it does preserve the rights of all those accountants who are at present auditing the accounts of non-quoted companies. We may have to look at that particular Clause—

Mr. Barnett: For three years.

Sir Eric Fletcher: Returning to the point of substance, the difficulty is to find a definition which fits all cases. It is quite absurd for hon. Members to pretend that this Bill is aimed in any way at doing any kind of injury to the small businessman. On the contrary, it is aimed at protecting him and giving him every encouragement consistent with the obligation on anyone who forms a company to disclose relevant information to which the creditors, the employees and the State are entitled.
May I in conclusion refer to criticisms that have been made—very sensibly made from both sides of the House—about omissions from the Bill?

Sir J. Rodgers: Before the Minister leaves the question of private exempted companies, he has given reasons why he cannot include non-quotable share companies, but what is the answer to the suggestion that companies whose aggregate assets do not exceed £100,000 might be excluded?

Sir Eric Fletcher: I think there would be difficulties about that. I shall bear

it in mind and discuss it, but to introduce distinctions of that kind might lead to difficulties. I have not overlooked the point the hon. Member made.
Hon. Members on both sides of the House have pointed out that certain things have been omitted from the Bill which they would like to have seen in it. That I can understand. We have done our best to put into the Bill the most important and urgent reforms which we think are called for. There may be differences of view about priorities. We have our own ideas about priorities and we think that disclosure of information is very important.
As my hon. Friend said in his opening speech, we are now fortified by the enthusiasm shown on both sides of the House for improving the Bill and by the suggestion that if we introduce provisions directed to requiring directors to disclose all transactions and shares in their companies, if we introduce provisions directed to requiring disclosure of beneficial ownership by anyone owning more than 10 per cent. of the shares of a company, and amendments designed to deal with non-voting shares, and if we also strengthen provisions about directors' emoluments, such improvements would be welcome.
We are anxious to please the House. I must warn the House, however, that there are difficulties of drafting in these matters. These are not simple matters. We shall do our best to see whether suitable drafting Amendments can be prepared during the further stages of the Bill in order to include further matters of value for the benefit of the investing public and shareholders generally.

Mr. William Clark: Before the Minister leaves all the excellent suggestions which have been made, will he say if he would put in shares of no par value?

Sir Eric Fletcher: I shall have to consult my right hon. Friend about that. My view is that I think the case for requiring disclosure of dealings by directors in shares of their own companies is made out. I think the case for requiring disclosure of beneficial ownership is made out. There are difficulties in drafting and we have to decide whether we should put the obligation on the beneficial owner, as the Jenkins Committee recommended,


or on the nominee, as the Cohen Committee recommended in 1947. We think the case is made for dealing with non-voting shares. I do not think there is the same unanimity in the House or among the public generally in regard to shares of no par value.
Bearing in mind the matters we have promised to consider in Committee, I am very glad to know that the House will give such an enthusiastic welcome to a Bill designed to cure the most pressing defects in the field of company law, a Bill which, by requiring the disclosure of much more information in companies' accounts and directors' reports, will check abuses, remove an unhealthy veil of secrecy, give confidence to shareholders, creditors, investors, employees and the like—[HON. MEMBERS: "Reading."]—I agree, this is my peroration—and will act as a useful stimulus to all progressive sections in industry and commerce.

9.55 p.m.

Mr. R. Gresham Cooke: I am very disappointed that the Minister without Portfolio, in his very long-winded winding-up speech, did not commit himself to any views on shares of no par value. After all, a Bill was introduced about ten years ago on this subject. It has been common practice in America for the last thirty or forty years. It is inexcusable for any Government not to put such a provision in a Bill purporting to implement recommendations of the Jenkins Committee.
Further, I cannot understand why the Minister without Portfolio did not answer the question asked by my hon. Friend the Member for Nottingham, South (Mr. William Clark) about the definition of "political". The Minister did not tell the House what his definition of "political" was. He seemed to think that it was tried to political purposes. We all know that almost any association we care to join is political, in the sense that it is trying to change the political course of the country in one direction or another. An organisation to promote cancer research tries to persuade the Government of the day to give more money for research into cancer. I remember a company with which I was connected a few years ago which liked to be well insured

on all sides. It gave moneys, on the one side, to various associations, including the rail makers associations, the locomotive manufacturers association, and light railway and tramways organisations. Yet, on the other side, it gave money to the British Road Federation, the Roads Campaign Council, Inland Waterways, and so on. Are all those bodies to be counted as political, because they are all trying to bring about a change in the policy of the Government, whichever Government is in power?
I am very disappointed, as I know my hon. Friends are, that the Minister in a forty-five minute speech did not give any definition of "political" beyond a reference to a political party. We all know that there can be many associations that are political in essence but which may not fall within the exact definition of Section 16.
This is wholly unsatisfactory. The Minister has not given us answers to questions which have been asked. Many of us came here today to hear answers to these very questions. I would like to vote against the Bill. I might even do so, but I shall just give the Minister without Portfolio a minute, before Mr. Speaker rises, to answer the questions I have put to him.

9.59 p.m.

Sir D. Glover: Mr. Speaker—

Mr. Charles Grey (Comptroller of Her Majesty's Household): Mr. Charles Grey (Comptroller of Her Majesty's Household) rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

BUSINESS OF THE HOUSE

Ordered,

That the Proceedings of the Committee of Ways and Means may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Darling]

WAYS AND MEANS

Considered in Committee

[SIR SAMUEL STOREY IN THE CHAIR]

Resolved,


COMPANIES


1. That, upon the re-registration of a company under the Companies Act 1948 in pursuance of any provision included in an Act of the present Session to amend the law relating to companies (hereinafter referred to as "the new Act"), there shall—


(a) if the company is registered with limited liability and is to be re-registered as unlimited, be charged, on articles lodged with the registrar of companies with the application for re-registration, a stamp duty of ten shillings; and


(b) if the company is unlimited and is to be re-registered with limited liability and a share capital, be charged, on a statement of the amount of the share capital to be delivered to the registrar of companies, the like ad valorem stamp duty as would be charged if the company were being registered under the Companies Act 1948 with limited liability and a share capital of that amount.—[Sir E. Fletcher.]

Resolved,


2. That, in respect of the several matters mentioned in column 1 of the Table set out below, there shall be paid to the registrar of companies the several fees specified in column 2 of that Table or such greater fees as may be specified in regulations made by the Board of Trade.

TABLE


Matter in respect of which Fee is payable
Amount of Fee


For registration on its formation under the Companies Act 1948 of a company as one limited by shares, registration under that Act in pursuance of Part VIII thereof of a company as one so limited (not being a company in whose case the liability of the members thereof was, before registration in pursuance of that Part, limited by some other Act or by letters patent) or re-registration under the Companies Act 1948 in pursuance of the new Act of a company as one limited by shares.
If the nominal capital does not exceed £2,000, the sum of £20.


If the nominal capital exceeds £2,000 but does not exceed £5,000, the sum of £20 with the addition of £1 for each £1,000 or part of £1,000 of nominal capital in excess of £2,000.


If the nominal capital exceeds £5,000 but does not exceed £100,000, the sum of £23 with the addition of 5s. for each £1,000 or part of £1,000 of nominal capital in excess of £5,000.


If the nominal capital exceeds £100,000, the sum of £46 15s. 0d. with the addition of 1s. for each £1,000 or part of £1,000 of nominal capital in excess of £100,000.


For registration on its formation under the Companies Act 1948 of a company as one not having a share capital, registration under that Act in pursuance of Part VIII thereof of a company as one limited by guarantee and not having a share capital or re-registration under that Act in pursuance of the new Act of a company as one so limited and not having a share capital.
If the number of members stated in the articles does not exceed 25, the sum of £20.


If the number of members stated in the articles exceeds 25, but does not exceed 100, the sum of £20 with the addition of £1 for each 25 members or fraction of 25 members in excess of the first 25.


If the number of members stated in the articles exceeds 100 but is not stated to be unlimited the sum of £23 with the addition of 5s. for each 50 members or fraction of 50 members after the first 100.


If the number of members is stated in the articles to be unlimited, the sum of £38.


For registration on its formation under the Companies Act 1948 of a company as one limited by guarantee and having a share capital or as an unlimited one having a share capital, registration under that Act in pursuance of Part VIII thereof of a company as one so limited and having a share capital or re-registration under that Act in pursuance of the new Act of a company as one limited by guarantee and having a share capital.
The same amount as would be charged for registration if the company were limited by shares or the same amount as would be so charged if the company had not a share capital, whichever is the higher.

Resolutions to be reported.

Report to be received Tomorrow; Committee to sit again Tomorrow.

HOUSING (FINANCIAL PROVISIONS) (SCOTLAND) BILL

Order for Second Reading read.

Motion made, and Question put (pursuant to Standing Order No. 62 (Public Bills relating exclusively to Scotland)), That the Bill be committed to the Scottish Standing Committee.—[Mr. Ross.]

Question agreed to.

Bill (deemed to have been read a Second time) committed to the Scottish Standing Committee.

HOUSING (FINANCIAL PROVISIONS) (SCOTLAND) [MONEY]

[Queen's Recommendation signified]

Considered in Committee under Standing Order No. 88 (Money Committees).

[Sir SAMUEL STOREY in the Chair]

Resolved,

That, for the purposes of any Act of the present Session to make further provision for the giving of financial assistance towards the provision of houses in Scotland, and for matters connected with the aforesaid matters, it is expedient to authorise—

(1) the payment out of moneys provided by Parliament—

(a) of subsidies in respect of houses, or of the cost of houses or of the cost of sites of houses, approved by the Secretary of State and provided by—


(i) a local authority, or
(ii) a development corporation, in pursuance of authorised arrangements made with a local authority or otherwise, or
(iii) a housing association in pursuance of arrangements made with a local authority or with the Secretary of State, or
(iv) the Scottish Special Housing Association; and

(b) of sums in lieu of subsidies which have ceased to be payable on the transfer or lease of any houses, hostels or other land;

(2) the payment out of moneys provided by Parliament of any increase attributable to the said Act of this Session in the amounts payable—

(a)under section 89 of the Housing (Scotland) Act 1950; and
(b)by reason of the amendment of Schedules 1 and 2 to the Housing (Scotland) Act 1962;

(3) such increases in the sums which may be issued out of the consolidated fund, raised by borrowing, or paid or repaid into the Exchequer, as may result from increasing to £145 million (or such greater sum, not exceeding £170 million, as the Secretary of State may by order specify) the limit imposed on the aggregate amount of advances which may be made to the Scottish Special Housing Association under proviso (i) to section 18(1) of the said Act of 1962, and such in creases as may thus result in any sums pay able under section 1 or 19 of the said Act out of moneys provided by Parliament.—[Mr. Charles Grey.]

Resolution to be reported.

Report to be received Tomorrow.

BUILDING REGULATIONS

10.5 p.m.

Mr. H. P. G. Channon: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Building (First Amendment) Regulations 1965 (S.I. 1965, No. 2184), dated 23rd December, 1965, a copy of which was laid before this House on 6th January, be annulled.
It is one of the defects of our Parliamentary procedure that from time to time when the Opposition of the day wish to discuss a Statutory Instrument they have, if it is an Instrument subject to the negative procedure, to move that the Order or Regulations be annulled even though there may not be the slightest wish for annulment. That is our position tonight. I must make plain at the outset that the Opposition have not the smallest wish to annul these very modest amendments to the Building Regulations. Our complaint is that not enough Amendments have been made and that those made do not go far enough.
My hon. Friend the Member for Crosby (Mr. Graham Page), in a powerful speech on an earlier occasion, pointed out the defects of these Regulations, and I must make plain to the House that it is almost, impossible to refer to the amending Regulations without referring briefly to the principal Regulations which we discussed last November. I hope that I shall be in order, therefore, if I make a fleeting reference to them in so far as they are directly relevant to these amending Regulations.
I hope that I have made it clear that we are not unduly critical of the Government for introducing the present Regulations. We wish that they had gone further, but if the Government can say that more comprehensive Amendments will be available shortly we shall be grateful, as I am convinced will be the industry.
I remind the Parliamentary Secretary to the Ministry of Public Building and Works that during the debate on the principal Regulations he told the House that it would be impossible for amending Regulations to come into force by February of this year. My hon. Friend the Member for Crosby pointed out on that

occasion that the principal Regulations could be treated only as a first instalment. Many points were raised during that debate on 10th November which showed that the original Regulations needed drastic amendment, and it is a little unfortunate that the opportunity has not been taken on this occasion to carry out more fundamental alterations.
The Parliamentary Secretary said then that the Ministry must consult the Building Regulations Advisory Committee before making any Building Regulations and he rather implied that this was one of the reasons why amending Regulations would be held up. The House will observe that at the beginning of these Building (First Amendment) Regulations there is a reference to the fact that the Minister
after consultation with the Building Regulations Advisory Committee…hereby makes the following regulations:—
We should like to know whether the new Committee under the chairmanship of Mr. Philip Bennett was consulted before these amendments were made. It must have been consulted if the opening paragraphs in these new Regulations have any meaning. We should like to know also when the Advisory Committee was reconstituted and set up.
These new Regulations were made on 23rd December, 1965. If it was possible, as the Parliamentary Secretary had said on 10th November it was not for the Regulations to be amended and for the first Amendment to come into force on the same day as the original Regulations, that is on 1st February, why was it not possible for more important Amendments to be made, which were discussed very fully during that debate? What view did the Advisory Committee take of the amending Regulations now in front of us, which the Parliamentary Secretary reminded us must first be considered by that Committee? If these Amendments were not considered by the Committee, a great deal of the Parliamentary Secretary's argument on 10th November falls to the ground.
My second question is to ask, as these Amendments are inadequate to meet the volume of informed and technical criticism about some of the provisions of the Building Regulations, when may we expect the next list? Will it be within


the next month or so? It ought to be. I do not contend that there will have to be frequent revision of the mandatory Regulations, but I contend that there is urgent need for a final definitive version of the Regulations so that everyone concerned may know exactly where he stands.
There ought to be regular revision, but not too frequent revision. What does the Parliamentary Secretary propose? Is it still the case, as we were told by the hon. Gentleman in the debate in November, that we shall have to wait till the autumn for the next set of Amendments? The hon. Gentleman did not say in specific terms that autumn would the date, but he gave the impression that this would be likely. That is far too long a time, and there are several urgent questions which these Amendment Regulations do not deal with adequately.

Mr. Deputy Speaker (Sir Samuel Storey): Order. We may refer to the need for further amendment to the Regulations, but we must not discuss it in detail today.

Mr. Channon: Yes, Mr. Deputy Speaker. I pass at once from that point and come to the present Regulations. When the new Amendments were considered by the Building Regulations Advisory Committee, what happened? The Committee did not issue a report on them; presumably it reported direct to the Minister. What is the drill in these matters? It is directly relevant to the present Amendments to know how they were produced and whether the same procedure will be followed for the next set. What is the normal procedure, and was it followed in this case?
In passing, I must tell the Minister that neither I nor, I am sure, the House will find the Explanatory Note to these Regulations adequate. Why cannot we be told more clearly what this set of Regulations is intended to do? To understand the Amendments correctly, one has to spend a great deal of time going through each one independently and setting it against the main Regulations. It would be helpful to Members of Parliament, if to no one else, if the Minister would arrange for these Ex-

planatory Notes to do what they purport to do, that is, explain the effect of the Regulations to the layman. Perhaps he will be good enough to bear this in mind on future occasions.
The House will be aware that included within the main Regulations and the Amendments there are two kinds of regulation, mandatory Regulations and "deemed to satisfy" clauses. Regulation G4, which is amended by Amendment Regulation 6, is a "deemed to satisfy" clause. The "deemed to satisfy" clauses embody a different procedure. If a certain material or technique is used, this may be deemed to satisfy the requirements of the Regulations.
It has been suggested that the "deemed to satisfy" clauses will require amendment far more frequently than the mandatory Regulations. The present amendments to the "deemed to satisfy" clauses do not go far enough. We must at all times remember the need to encourage—I hope that everyone on both sides of the House concurs in this—new techniques and the use of new materials in the building industry. In order that less progressive local authorities may not hold up the advance of new techniques by playing safe, the "deemed to satisfy" clauses will have to be amended more frequently and, perhaps, be published separately.
Here is an example of one requirement which may well have to be amended in the fairly near future. I refer again to Amendment Regulation 6 which refers back to Regulation G of the Building Regulations. Regulation G deals with sound insulation, and the "deemed to satisfy" clauses for sound insulation of walls refer to traditional forms of construction. In recent years, however, there have been developments—the amendment does not deal with them—especially in connection with prefabricated timber houses. There can be cases in which sound insulation is effected by having a timber frame with plasterboard finish and a glass wool quilt running between the two. This is an example of a technique in respect of which both the main Regulation and the Amendment Regulation with their "deemed to satisfy" clauses may be out of date very soon. It is obviously helpful to the small builder and to smaller firms of architects that there should be more frequent amendment of the "deemed to satisfy" clauses. Do the


"deemed to satisfy" clauses, these amendments and others that may later be made, have to have the approval of the Building Regulations Advisory Committee in the same way as the mandatory Regulations do?
During the debate on 10th November the Parliamentary Secretary told us that he agreed that there should be regular reviews of the Regulations. I suppose that we may say that this is the first example of a review. However, the hon. Gentleman would not commit himself to an annual review, which he said was an open question. I submit that there is a strong case for having the "deemed to satisfy" clauses reviewed at least annually, although it may not be practical to amend the mandatory Regulations so frequently. The House would like to know before it decides to accept the amending Regulations what progress has been made since November. Is the Parliamentary Secretary in a position to answer my points about the "deemed to satisfy" clauses, and can he tell us how frequently he will be able to carry out a review?
I turn to Amendment 5 in the amending Regulations. It is an amendment to Regulation E, which deals with structural fire precautions. The words "layer of combustible material" are to be included, so that the Regulation reads:
…where the surface is required to be of Class O, the material shall…be non-combustible throughout; or…comprise a base or background which is non-combustible with the addition of a surface not exceeding 1/32 inch thick so that the spread of flame rating of the combined product is not lower than Class I in clause 7 of B.S. 476: Part I: 1953".
It goes on to make a further rider.
I want to deal specifically with Amendment 5 dealing with the layer of combustible material. What will be the exact effect of the amendment? Of the 2,800 comments made on the draft Building Regulations, 888 dealt with the problem of structural fire regulations. It will be seen that there is still considerable anxiety about this section of the Regulations. The House is obviously of the opinion that we must have fire regulations which will minimise the risk of fire as much as possible, but there are nevertheless a number of objections to the Fire Regulations as they stand. If you are in an indulgent mood, Mr. Deputy Speaker, perhaps I might just say that it is an anomaly that means of escape

cannot be included. Is the amendment merely a drafting amendment, or does the addition of those words mean any change in policy? Can the Parliamentary Secretary give us a categorical assurance that the Fire Research Station has been fully consulted on the amendment and, indeed, on the Regulations as a whole?
Class O, to which the amendment is directly relevant, applies to the walls of institution buildings and to circulation spaces and protected shafts in every kind of building except small residential buildings. Has the Report of the Building Regulations Advisory Committee been followed in this? Is it now the case that as a result of Amendment 5 certain plastic-faced materials or plastic-faced metal will be accepted as a base or background whereas previously they would not have been? Can we be told? The Parliamentary Secretary will know that on this very point there has been considerable complaint from the plastic industry, and will no doubt have seen the November, 1965, issue of the magazine, British Plastics, which pointed out the extreme difficulty of the basic fire resistance tests as defined by B.S. 476: Part I: 1953. I understand that fire propagation and combustibility tests are now under consideration by a B.S.I. Committee. Can the Parliamentary Secretary tell us whether the Amendment has any relevance to that? Can he say anything further in the matter?
If an institutional building is being constructed—institutional buildings are defined in the Regulations; a hospital, an old people's home and so on—what is the Minister's advice to the builders? What should the surface of the walls be made of. I am advised that even several coats of paint on plaster might not fall within the terms of this amendment; that some but not all wallpaper will; that vinyl coated paper might just; and that formica certainly would not. But nothing would stop a person from having fitted furniture units with formica on the front or finishing a wall with plaster and putting on formica later.
It is fortunate that this Chamber was built in the 1940s and the 1950s, for I doubt whether it would be possible today, under the Regulations as amended, to have wood panelling, although, since we are in London, we might have been


treated differently under the London Building Acts.
Would not the Parliamentary Secretary agree that one of the difficulties of the amending Regulations is that they might mitigate against factory construction methods? It seems anomalous that, despite these quite properly severe fire precautions, one can have inflammable wallpaper or factory-made book shelves on walls like this. We certainly want precautions and do not want to encourage any lowering of standards for safety. We want them, however, to be practical and in a form that will not discourage safe and modern techniques. I hope that the hon. Gentleman will be able to say that the Amendment is only the first of many to be made to Regulation E on fire precautions.
Even with the Amendment, the position of large industrial installations remains difficult. Such installations were exempt from the provisions of the previous byelaws. But for some reason they have not been granted exemption under the Regulations. At the moment, only single storey industrial buildings are exempt, and then only partially so. The main difficulty arising out of Regulation E, as amended, is that it is not possible for a factory below 90 feet in height to have a cubic capacity of more than a million cubic feet and for a factory exceeding 90 feet in height to have an area of more than 20 thousand cubic feet per storey and a cubic capacity of more than 200,000 cubic feet. There are many outside that limit.
No doubt the hon. Gentleman will say that power is given, in relation to Amendments Nos. 3, 4 and 5, to the Minister but not to local authorities to dispense with or relax the amended regulations in relation to any particular case—and I do not quarrel with the fact that the power is not given to local authorities. I am sure that the Minister's waiver power will be used sensibly and in the best interests of the industry. We have been told time and again that that will also be true of the new building control provisions.
Under these Regulations, several hundred waiver applications will be submitted each year. But is not the waiver system intended for unforeseen circum-

stances primarily and not for the sort of case I am putting? What has the Minister in mind about the large and frequently automated factories which have little human occupation? Large departmental stores are also affected by the amended provisions and this aspect needs dealing with quickly.
What is to be the policy about waivers? Will a library be kept of the small waivers granted? Will the Minister's waivers be circulated generally in suitable cases? Local authority waivers will not concern Amendments Nos. 3, 4 and 5 but are directly related to every other amendment, except possibly for Amendment No. 1. What will happen in these cases? The local authority is allowed to waive any regulations which do not fall within Regulations dealing with structural stability or structural fire precautions. Do the Government intend that local waivers shall be collated? It might be a good idea for local authorities to make a return to the Ministry of Housing and Local Government to show what local waivers are granted. There are occasions when there are special local conditions, but the idea of the amended building regulations is that there should be a general code throughout England and Wales, except for the old administrative County of London, and it would be interesting to have information about local authority waivers.
I turn briefly to Regulations L and M dealing with chimneys, flues, pipes, hearths, fire place recesses, heat producing appliances and incinerators. These are amended to some extent by the proposed Amendments 7, 8 and 9. But there still remains the problem of oil appliances which are treated in these Regulations in the same way as solid fuel appliances. There are many safety devices which can be attached to oil furnaces and which can give a far greater degree of control than can be the case with solid fuel, but there is evidence that even with the Amendments certain oil-burning appliances may be increased in cost by more than 10 per cent. as a result. It is clear that temperatures experienced in modern small oil-fired appliances are comparable with those of similar size gas appliances.

Mr. Deputy Speaker: The hon. Gentleman is now getting on to a subject which does not come within the scope of these amended Regulations.

Mr. Channon: I think that there is some relevance to Amendments 7, 8 and 9, but I bow to your Ruling at once, Mr. Deputy Speaker, and I naturally move on.
During the last debate on the subject, the Parliamentary Secretary was allowed by Mr. Speaker briefly to say that legislation would be needed to get rid of the many anomalies in the Building Regulations, but I would not dare to trespass on your Ruling by suggesting that the Parliamentary Secretary should tell us what progress has been made, although I am sure that that would be directly relevant to the amending Regulations.
The amendments and the Regulations themselves are warmly welcomed by the Opposition. They are the co-operative work of both Conservative and Labour Governments. However, we regret that, in spite of the amended Regulations, there still remain many anomalies and difficulties. I recognise that this raises other problems, and what we want to hear from the Government tonight is a progress report on some of the issues which I have raised and which, I hope, are directly relevant.

Mr. Deputy Speaker: Order. That would be out of order.

Mr. Channon: I bow to your Ruling, Mr. Deputy Speaker.
I hope that the Parliamentary Secretary will be able to comment on my remarks about these amendments. He will know that our main anxiety is to know that these are one of a long series of amended Regulations which will come before us. We hope that he will be able to give us some news. If he can, then the Opposition will be well satisfied with this evening's work.

10.28 p.m.

Mr. Bernard Braine: My constituency has seen a building development in the last few years on as great, and perhaps a greater, scale as that of the other fast developing areas in the country and both my constituents and the local authorities are therefore particularly sensitive to the need for good, sound Building Regulations. Accordingly, when the first amending Regulations came out, I wrote to the clerks of the four district authorities in

my constituency to ask for comments. Their response was interesting. Each consulted his engineer and surveyor and one replied to say that before commenting on the first amendment to the Regulations, there were, he feared, many points in the Building Regulations, 1965, which needed clarification.

Mr. Deputy Speaker: Order. We cannot discuss those tonight.

Mr. Braine: I am fully aware of that and I was going on to say that it is not possible to discuss them. In any event, the local authority associations are making their own representations on the subject to the Minister. As a result, no doubt we shall get further clarification. My hon. Friend has asked a formidable barrage of questions and it not my intention to delay the House for more than a brief moment.
I have only one small point. One of the clerks wrote to me as follows:
It seems a pity that the Amendments alter the scale of block plans. The original printing giving 1/250 scale was considered to be a desirable improvement over the Building Byelaws which required 'not less than one inch to very 44 feet.' (1/528) The Amendment now quotes 1/1250—a much smaller representation.
On the face of it, this is an extraordinary amendment. The original scale was 1/250. This was altered in the main Building Regulations 1965, to 1/1250, which at the time was considered to be a great improvement. Now in these Regulations a smaller scale than that which was considered desirable in the 1965 Regulations is introduced. We are going back to the situation which was amended by the 1965 Regulations. What is the reason for this? Who asked for this amendment?
Local authorities—perhaps I may be permitted to say this—not only in my constituency but up and down the country—are battling with acute staff shortages. Nowhere is the shortage more acute than in the offices of engineers and surveyors. There may be a case for smaller scale plans being required. If so I hope that the Parliamentary Secretary will say something about it. The point I want to emphasise is simply that this chopping and changing in minor detail is confusing already over-burdened local authority staffs.


This amendment is brought forward with no explanation. Perhaps the Parliamentary Secretary will justify the amendment when he comes to reply and explain how it came to be made.

10.34 p.m.

Sir Anthony Meyer: The last time we discussed this subject, on 10th November, I brought to the attention of the Parliamentary Secretary a case with which I am sure he is only too familiar, arising out of illuminated ceilings. I would like to ask the hon. Gentleman if he will enlighten me on this. I have had a careful look at this Amendment No. 5 to see whether it goes any way to meet the point I raised in the last debate.
As far as I can make out it does not. Perhaps the Parliamentary Secretary would be kind enough to say if this is so. It seems a rather shocking state of affairs that a mistake, or oversight, which was admitted to have been made by his Department in drafting the Regulations should take so long to rectify. If it is going to take as long as this to rectify such a simple mistake, how long is it going to take to alter the Regulations in the light of the changing needs which will arise as we evolve new materials, new methods and so on? I very much hope that the hon. Gentleman can give me some satisfaction and at least assure me that if this particular amendment does not cover the case I brought to his attention, there will be a further amendment to do so.

10.35 p.m.

The Parliamentary Secretary to the Ministry of Public Building and Works (Mr. James Boyden): I should like to refer first to column 333 of the OFFICIAL REPORT of the last debate, because the hon. Member for Southend, West (Mr. Channon) rather teased me about it. I did not make any commitment there.
Perhaps I might explain what I like to call "the arrangements" for altering the building byelaws. There are three groups. There are those that we are discussing tonight, which are problems of drafting and have no substantive significance at all. If one looks at my statement on 10th November, I suppose that it could be said that I had included this group.

These are simple amendments that could be easily made, but they do not make any substantial alterations to the Regulations at all.
Then there are the substantive amendments, which are the ones which cannot be under, discussion tonight but which were discussed on the previous occasion. Those are serious and important amendments that take a considerable time to draft. At the risk of being nearly out of order, I will give a brief explanation of what is happening with those.
Then there is the new legislation which has been referred to. That is a very important matter which the Ministry of Public Building and Works is actively preparing. But it is a very long job.
The matters which are strictly under discussion tonight are very small indeed. They are, in the main, minor corrections to, and clarifications of, details in the original Building Regulations. The addition of one local authority, Hambledon R.D.C., to the list of those in whose areas special treatment of soft-wood timber is needed against attack by the longhorn beetle is the only amendment of any significance.
I can hardly give the rest the description of "amendments". There are about 30 alterations on 170 closely printed pages, containing lots of figures. I did an exercise, and, putting them into my own words, they can be incorporated on one sheet of paper. That is what, within the rules of order, we are discussing.
Perhaps I could explain how they come about. The hon. Member for Essex, South-East (Mr. Braine) made a very big meal about the plans. In fact, it was a typing error or misprint. There has been no storm about having the smaller plans, and it is generally accepted that the smaller plans would be highly acceptable. I imagine that anyone who wanted to submit a larger plan could do so. The plain fact is that the figure "1" had been omitted.

Mr. Braine: I would not have risen but for the fact that the hon. Gentleman said that I was making a very big meal of this. As a result of a typing error, local authority officials who are already overstrained may be doing something that is wrong. Unless someone asks the kind of question that I asked, no explanation


is ever given. Far from making a big meal, it is a blessing that there is a Parliament which can check Ministers, who sometimes are too complacent.

Mr. Boyden: Now the hon. Gentleman knows that it is a typing error. Half the mistakes are of that sort. It will probably be convenient if I refer to the page numbers. On page 147, there are four "nils" omitted from the tables. On page 134, on two occasions "4" has been substituted for "3". On page 125, two sets of figures have been transposed. On page 37, a "(b)" footnote has been left out. On page 38, an asterisk has been mistakenly put in for a dagger. I am sure these matters should be discussed in the House, but this sort of thing can happen reasonably easily.
There is still one mistake which hon. Gentlemen have not yet noticed—

Mr. Graham Page: The hon. Gentleman has said, for example, that, in one case, an asterisk was inserted instead of a dagger. But that astersik referred to a note which said that there should be no fire resistance in certain basements. This is a vital point when shops are concerned. This may have been a mistake, but it is not a trivial matter.

Mr. Boyden: It has now been put right. I do not see what the hon. Gentleman is grumbling about—

Mr. Graham Page: I was not grumbling: I said that it was not a trivial matter.

Mr. Boyden: "Trivial" means "small", and these are small matters—

Mr. Page: Basements are not small matters.

Mr. Boyden: Considering the thundering about important matters like fire and things of that sort, these are relatively de minimis.
There are 10 cases—that is about one third—of slight alterations of words. For instance, the hon. Member for Southend, West referred to page 38, where, under the heading "Elements above ground", the sub-heading "External walls" should read "Other elements". There is a similar one one page 49, which the hon. Member for Southend, West referred to, where it says that the material should:

comprise a base or background which is non-combustible with the addition of a surface…
"Surface" is a philosophical concept and not one suitable for the Building Regulations. The words left out are "layer of combustible material", to make it read:
…surface layer of combustible material…
About seven or eight further alterations were required there. For example, there are six referring to gas fires, where the words "gas fires" needed to be put in to distinguish between space-heating gas fires and gas boilers. This is on pages 79 and 87. There is another set of alterations in which words are needed to clarify the position. For example, on page 76, the National Clayware Federation suggested that a new type of chimney lining should be added. This has been done.
Similarly, the Gypsum Plasterboard Development Association suggested, with regard to pages 136 and 137, that the word "gypsum" should be substituted for the words "(or perlite)". This has been done in about four or five cases.
Therefore, the only things which have any special significance are the addition of Hambledon R.D.C. because of the longhorn beetle, over which there was consultation, and the alteration of the plans. That is the only consultation which has taken place. The rules about consulting the Building Regulations Advisory Committee and the interests concerned were not thought to arise in this case because they were all matters of this kind, which the Advisory Committee would have agreed to.

Mr. Channon: How can the hon. Gentleman say that they were not thought to arise in this case, when his own amending Regulations say:
The Minister of Public Building and Works in exercise of the powers conferred on him…in that behalf, after consultation with the Building Regulations Advisory Committee…"?
How can he purport to make Regulations which say that he has consulted the Building Regulations Advisory Committee, if the Committee has not been consulted?

Mr. Boyden: Surely the hon. Gentleman thinks that printing errors and typing errors should be put right without consultation. He is making heavy weather of consultation. It is the substantive


amendments, which I understood he is anxious should be prepared, which require consultation and considerable thought. He asked what is the present state of play on that.
A second set of amendments to the Regulations—to substantial and important Regulations—has been formulated. The proposals have been put into legal form as draft amendments to the Regulations by the Treasury Solicitor, and they will be circulated to interested bodies in the course of the next week or two. The Advisory Committee has been established. I have had discussions with the Chairman and put to him the need for urgency combined with accuracy. This will be the first task of the new Advisory Committee.
The subjects which are ready for submission to the Advisory Committee are small sheds, buildings housing large industrial plant—a point made by the hon. Member for Southend, West—damp-proof courses, sprinklers—mentioned in the previous debate—plastic insulation, plastic ceilings and plastic tiles.
May I tell the hon. Member for Eton and Slough (Sir A. Meyer) that we have had two discussions with the firm in which he is particularly interested, and the subject in which the firm is interested is included in the first set of substantive amendments. I must be cautious about this because there are all sorts of vicissitudes in this life, but it is highly probable that the first set of substantive amendments will be ready for the summer, and I hope then that the firm of Isora, Ltd., will find the amendment satisfactory.
May I explain to the hon. Gentleman how the situation arose? When the draft Regulations were sent out there were no representations by that firm at all. The draft Regulations were circulated widely. It was not until the final draft was published on 27th September, 1965, that the first formal representation was received from the firm, and since that date the firm has been in correspondence with me and its chief representative has had discussions with my Department on two occasions.

Sir A. Meyer: Is the hon. Member saying that the firm was shown the draft Regulations at a much earlier stage than

publication—that the firm had the opportunity of seeing what was in the wind?

Mr. Boyden: No. Individual firms cannot easily be sent copies of Regulations. They are circulated to the trade associations and one expects associations and firms in the associations to get their information in that way. But Isora, Ltd., did not make any formal representations until relatively recently. I am suggesting that my Department has acted with commendable speed in dealing with the firm's representations.

Mr. Braine: In the main Regulations it is stated that block plans shall be on a scale of not less than one in 250. I understand from what the Minister says that this was a misprint, a little error, of no substantive significance at all. Until his admission tonight, had his Department taken any steps to inform local authorities that this was a misprint in order to avoid their laying up stocks of larger maps or plans? Has the Department taken any such steps or has it landed local authorities in unnecessary expenditure?

Mr. Boyden: It is assumed that local authorities will read the amendments in a great deal more detail than does the hon. Member.

Mr. Braine: I hope that the hon. Member will not persist in saying—

Mr. Deputy Speaker: Order. If the Minister does not give way, the hon. Member for Essex South East (Mr. Braine) must resume his seat.

Mr. Braine: The hon. Gentleman is being a little unfair. He suggested that I had not read the Regulations carefully. In fact, I made it plain that I raised the matter because the clerk of one of my local authorities had raised it with me. Officers of that authority were puzzled. I am now asking for a direct and categoric answer to this question. Was this misprint drawn to the attention of local authorities so that they could avoid unnecessary trouble and expense or is the Minister's statement tonight, the result of my having raised the matter, the first news that local authorities have been given about this error?

Mr. Boyden: The Regulations were published on 23rd December. They have


been available for a considerable time to local authorities.
I was also questioned about oil-fired equipment. One of the difficulties is that the oil concerns have not been able to fulfil the experimental conditions put to them in the same way as the Gas Council—

Mr. Deputy Speaker: Order. I do not think that oil-fired appliances come within the scope of these Regulations. I have already stopped an hon. Member from speaking about them.

Mr. Boyden: The matter had been raised, so I wished to comment on it. It is rather difficult to speak on this matter, because practically everything which is subject to substantive amendments appears to be out of order. However, I have dealt with most of the amendments that are coming through the pipeline, although there are others.
Since the Regulations were published in July, 1965, 140 proposals for amendments have been received from various bodies. Of these, about 40 arose out of discussions between the bodies concerned and Ministry officials. Eighteen of these proposals are included in the draft Building (Second Amendment) Regulations, to which I have referred. Of the remainder, 33 have been provisionally rejected as not being satisfactory. About 30 are being prepared for consideration by the new Advisory Committee and about 50 are under technical consideration.
I mention this because I wish to emphasise the enormous amount of work that is involved in dealing with these amendments, having discussions about them and so on. Hon. Gentlemen opposite sometimes speak with two voices on this matter. While on the one hand the hon. Member for Crosby (Mr. Graham Page) referred to the great losses due to fire and the need to take special precautions against it, on the other certain hon. Gentlemen opposite say that we should get on with the amendments as fast as possible, presumably suggesting that a short cut should be taken. It is not much use, making quick amendments which result in a situation where there could be grave risk to life because we had not been absolutely thorough. Some of the resources

available—for example, for fire testing; the sort of resources left us by the previous Government—are nothing like adequate. That is another difficulty.
Several of the Parliamentary Questions asked by hon. Gentlemen opposite have implied that there are far too many civil servants and that certain Departments should be reduced. Yet here is a case where there is need for additional staff and—

Mr. Deputy Speaker: Order. The hon. Gentleman is getting wide of the Statutory Instrument, which deals with certain specific amendments. That is all that we can discuss tonight.

Mr. Boyden: I was asked about waivers and relaxations. Local authorities have power to relax any provisions of the Regulations except those in Part A, general, Part D, structural stability, and Part E, structural fire precautions. The Minister has power to relax Parts A, D and E but, in fact, only relaxations under Part E are likely to be normal.
I was then asked about advice being given to people. The Minister is contemplating the possibility of publishing selected appeal decisions on the same lines as in the planning sphere. He will also consider whether any publicity could usefully be given about the Regulations. Referring to waivers again, we expect not several hundred but several thousand each year, and we are preparing for this. I have indicated the way in which the Department will deal with them.
I was also asked about amendments in relation to fire. Of course, the Fire Research Station is consulted about these and, as I think I indicated in answer to a Question, I have had discussions over this matter. The Fire Research Station is seeing in what way it can expand its facilities to cope with the situation that is likely to arise.
I was asked about the "deemed to satisfy" clauses. The Ministry has followed the advice of the Advisory Committee here. The trouble with "deemed to satisfy" clauses is that the builders like them in black and white. They like to have specific examples—it gives them a sense of certainty. But one of the difficulties is that it tends to freeze technological development, because those concerned with materials and processes


that are not in the "deemed to satisfy" provisions are inclined to feel that there is prejudice against them. This is not true, of course, but that is the feeling that operates. On the other hand, architects and designers tend to prefer not to have any limitations; they do not want to feel tied. There is no easy answer to this. One of the great advantages of the new Regulations, the new system, is that additions to the "deemed to satisfy" clauses can be much more readily made. That is one of the matters that is very much under consideration by the Ministry of Public Building and Works.
The hon. Member for Essex, South-East asked for an explanation of a particular point. I would point out that an Explanatory Memorandum was issued at the same time as the Building Regulations. Another, more technical document was issued on 31st January, which dealt with specific technical aspects of the Regulations and in which the Department had the assistance of a firm of architects. This has all helped to ventilate the Regulations, and to have them thoroughly discussed. A private firm has also issued an explanatory document about the Building Regulations. My Department has arranged conferences and discussions, and local authorities have done the same. The hon. Member can therefore rest assured that there has been very considerable discussion—and, of course, the documents, including this amendment which has been the subject of this debate, were sent to all local authorities.
All possible steps are being taken to ensure that the substantive amendments are produced as soon as possible. The Department has been very thorough in making these minor alterations now under discussion, and I can assure both the hon. Members for Southend, West and for Essex, South-East that this will continue to be the attitude of the Department, and every possible step will be taken to see that those matters that can be dealt with speedily will be.

10.59 p.m.

Mr. Graham Page: The House would be justified in complaining about the Explanatory Memorandum to these Regulations. I know that, strictly, the Explanatory Memorandum is not part of the Regulations, but the Memorandum

leads us to believe that the Regulations contain minor corrections and clarifications. The hon. Gentleman the Parliamentary Secretary used much the same phrase—in fact, a little more strongly, perhaps—suggesting that we really need not bother about them at all. He said that they were just trivial and drafting, but as he went on to explain it was obvious that they were not trivial and drafting.
The first one, which occurs as an amendment to page 37 of the main Regulations, is an amendment to the Fire Regulations relating to offices. It provides that where there is a non-compartment wall or floor the fire resistance need be only half an hour instead of an hour as in the original Regulations. This is not a trivial matter.
When we turn the page to the next amendment we see a column headed "Elements above ground" and another headed "External walls". It includes many things besides external walls to which certain materials of fire resistance apply. That certainly is not a minor amendment. Nor is the one concerning the asterisk and the dagger, which may or may not have been a misprint. It certainly relates to shops and applies the rule to shops.
No fire resistance is required if the elements form part of a basement storey which has an area not exceeding 500 square feet.
There again there is a different form of construction.
Regulation No. 4 alters the wording from "within a distance of" to "less than". Reading the Regulation as amended on page 41, it states:
Any cladding on any external wall, if such cladding is situated within a distance of 3 feet from any point on the relevant boundary, shall be non-combustible
Previously the wording was:
situated within a distance of 3 feet.
The hon. Gentleman's Department has produced an admirable book of technical explanation of the Building Regulations, but unfortunately, the book used the wording of the Regulations before amendment. What is to be done about the book? Will it be rewritten and amended, for it uses the words:
within 3 feet of the boundary
It is not a trivial matter to have a substantial book like this reprinted and amended and sent to everyone who had the original.
Regulation No. 6 deals with sound insulation between residential flats. Whereas the original Regulations required this under one specification, they are now amended to come under four. That may be a vital matter for those who live in flats. Sound insulation between two residential flats may make all the difference between decent living and nuisance from one flat to another.
Regulation No. 8 originally said that the Building Regulations applied in this instance to all space heating appliances. Now the provision is limited to gas fires only. That surely is a substantial amendment. I hope that if the hon. Gentleman is to bring forward any more amendments of this sort he will see that the Explanatory Memorandum gives some assistance in understanding what the amendments are about and that he will treat them as serious for those concerned in the trade.
I have an even more serious point to put than that of chiding the hon. Gentleman for not explaining matters fully or passing them off as trivial., He said that the Building Regulations Advisory Committee had been fully consulted on these Regulations. When a Minister is required by an Act to consult somebody, a committee or other industries, before making Regulations, it is customary—indeed the Select Committee on Statutory Instruments has asked Departments to do it again and again—for a recital to appear at the beginning of the Statutory Instrument confirming that the Minister has carried out those consultations. That appears in the recital to the Statutory Instrument before us. Reading it, one assumes that the statement is correct. It says that these powers have been exercised by the Minister
after consultation with the Building Regulations Advisory Committee and such other bodies as appear to him to be representative of the interests concerned…
It is obvious—the hon. Gentleman will stop me, I hope, if I misunderstood him—that the Building Regulations Advisory Committee had not been consulted on these Regulations because he said that in some cases it was not thought necessary to consult the Committee. He mentioned that certain other bodies had been consulted about them, which I took to be
such other bodies as appear
to the Minister

to be representative of the interests concerned.
But the Building Regulations Advisory Committee had not apparently been consulted about all these Regulations. In Section 9(3) of the Public Health Act, 1961, which is the Statute giving the Minister the power to make these Regulations, and the only power which he has to make these Regulations, there is the following provision:
Before making any building regulations, the Minister shall consult the Building Regulations Advisory Committee and such other bodies as appear to him to be representative of the interests concerned.
I cannot question what other bodies appear to him to be representative of the interests concerned. That is in the discretion of the Minister. But it is not in the discretion of the Minister one jot to decide whether or not he shall consult that Committee. He is required by Statute to consult that Committee before making not "some" Regulations, not "general" Regulations by "any" Regulations. I will read the words again—
Before making any building regulations, the Minister shall consult the Building Regulations Advisory Committee…
Unless the hon. Gentleman can assure the House that that was done in the case of the Regulations, then these Regulations are ultra vires and he should take them back.

Mr. Boyden: The statutory requirements have been complied with. These were mistakes, typing errors and things of that sort. The original consultation was made with the Advisory Committee on the substance of these matters which have been put right.

Mr. Page: The hon. Gentleman now confirms definitely that these were ultra vires. It is not sufficient to consult the Advisory Committee upon some previous Regulations and to refrain from consulting that Committee when making further Regulations, even though they may be merely amending Regulations. The subsection says clearly:
Before making any building regulations, the Minister shall consult the Building Regulations Advisory Committee…
I am afraid that the hon. Gentleman has confirmed again that these Regulations are now ultra vires. It is quite outside the power of the Minister to make these Regulations without coming


to the House and confirming that he has consulted the Building Regulations Advisory Committee on each of these Regulations. That is what the Statute obliged him to do, and that is what he must do before he brings the Statutory Instrument before the House—before he makes it, lays it and brings it into operation.
I am sorry that we have this situation. The amendments have got to be made to these Building Regulations, but the House cannot disregard a direction in a Statute to a Minister on something that he must do as a condition precedent to bringing the Regulations before the House. From what the hon. Gentleman has said, there can be no other conclusion than that these Regulations are ultra vires.

Mr. Boyden: With the leave of the House, Mr. Deputy Speaker, perhaps I may say that I am assured that the statutory requirements have been complied with.

11.9 p.m.

Mr. Channon: My hon. Friend the Member for Crosby (Mr. Graham Page) has certainly raised an important issue and it shows the value of moving a Prayer of this kind. I may say that I cannot pretend to know whether the Minister is right in his assurance about the statutory consultations having taken place, or whether my hon. Friend is right in his interpretation which, at first sight, seems to be the correct one.
I would ask the Minister to consider that if he is correct in his interpretation, it is nevertheless unfortunate that it should say at the beginning of the amending Regulations that they had been made after consultation with the Building Regulations Advisory Committee, when he now tells us that they have not been done after consultation with the Building Regulations Advisory Committee.
No doubt the hon. Gentleman will be considering as a matter of some urgency whether or not my hon. Friend the Member for Crosby is right in his statement to the House that all these amendments are ultra vires. I suggest to the House

that although to the Parliamentary Secretary some of these Regulations appear to be de minimis, to use his words, thank goodness this not a case of de minimis non curat lex because we hope that the Minister will amend some of these Regulations. It has been shown how some authorities have been misled by the errors. I have no doubt that owing to the size of the Regulations there were bound to be errors no matter how careful the scrutiny but, as my hon. Friend the Member for Essex, South-East (Mr. Braine) has shown, they have been the cause of the serious misleading of the authority with which he is connected.
On the points about future Regulations, we are grateful to the Parliamentary Secretary for his assurance, and I am sure that the industry will be grateful to him as well. As I said earlier and have said on many occasions, the original drafting contained a number of anomalies and contradictions. These first amendments have gone some way to removing some of the smaller doubts about the Regulations. We are all delighted to know that legislation has been prepared and that the Minister will come forward earlier than we originally thought he would with further amending Regulations. This is important to the industry and the House and we are delighted to be told that.
Therefore I shall propose to ask leave to withdraw the Motion, first because if the interpretation of my hon. Friend the Member for Crosby is right these Regulations are in any event ultra vires. Secondly, even in the unlikely event of my hon. Friend being wrong—and I have never known that to happen before—and the Parliamentary Secretary being right, these amendments are modest ones to the original Regulations. Except possibly for the case raised by my hon. Friend the Member for Essex, South-East, they are improvements and none of us wishes to inhibit the Minister from making further improvements. We are grateful that that task is being tackled with speed and I therefore beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

WAR DISABILITY PENSION (MR. OFFORD)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Howie.]

11.13 p.m.

Mr. J. M. L. Prior: I am grateful to the Chair and to the House for the opportunity to raise this matter this evening. My constituent Mr. Offord joined the Army in June, 1940. He was commissioned in March, 1941, and subsequently served at home and in the Far East until June, 1946, when he was released in the normal way. While serving in the Far East he was taken prisoner by the Japanese and spent three years and six months in captivity. Following his repatriation to the United Kingdom in February, 1946, he stated that he had had malaria 12 times, tropical ulcers, beriberi and jaundice.
Mr. Offord was an officer in the Royal Norfolk Regiment which formed part of the ill-fated 18th Division which consisted very largely of troops from Norfolk, Suffolk and Cambridgeshire and whose capture and subsequent treatment as prisoners of war by the Japanese have left an indelible mark in the minds of those many families who were affected.
I wish to relate only one example of the story of that time as related by Mr. Offord. I do so to highlight the terrible deprivations that he and many others suffered. In a statement which he gave to me, he said:
I was commanding an assorted force of Royal Norfolks, Indian troops and Australians, and contracted malaria which did not assert itself till the last 48 hours of the mainland fighting. During the fighting retreat from Batu Pahat to Johore Bahru, I was greatly inconvenienced by stomach disorders necessitating motions as much as 20–30 times daily. At that time I was commanding the mixed force mentioned above, and was responsible for all policy, being segregated from all higher authority. After arriving back to Singapore, having marched some 70 to 80 miles in 3–4 days and nights, I was admitted into the civil general hospital suffering from malaria, jungle ulcers, raw feet and unspecified stomach disorders through living in the jungle on whatever could be foraged in the way of food and drink.
That amply describes the sort of problems which my constituent had to face.
On his discharge in 1946, his general condition and state of nutrition were,

however, found to be good, and I am not for a moment disputing that. In January, 1954, Mr. Offord saw his doctor and complained of numbness and dead fingers, crampy pain in the calves, and indigestion. He had had these sym-toms for about three years. He had previously seen his doctor in 1949, when the diagnosis was that he had xanthoma. In March 1954, he had a number of examinations in hospital, and reports stated that he was suffering from essential cholesterolaemia with generalised atheroma. In August 1954, he was admitted to hospital and his right leg was amputated. Subsequently, in 1959, his left leg also was amputated.
On 31st December, 1957, and again in June and October, 1961, there were appeals before the Pensions Appeal Tribunal. I know that the rulings of those three tribunals are legally binding upon both the Minister and Mr. Offord and I am, therefore, not able to argue otherwise tonight. I have to accept those rulings, but I wish, none the less, to make two or three points. First, it seems to me that, in considering evidence which is put before a tribunal, consideration ought always to be given to the relative availability of witnesses particularly in a specialised medical field. I do not suggest that the Ministry is not helpful in these matters, but one has to bear in mind that it does have access to much greater medical assistance than, perhaps, is open to the appellant.
In this case, Mr. Offord was fortunate. He was able to produce evidence from two consultant surgeons, Mr. Craig and Mr. Owen, and also from Professor Peart of St. Mary's Hospital. All three took the view that it was at least possible to assume that his wartime experiences could have contributed in some part to the development of his condition. On the other hand, the Ministry was able to bring heavier guns before the tribunal to say the contrary.
My main point is that, writing in 1960, at the time of the proceedings before the tribunal, Professor Peart said that little was known about essential hypercholesterolaemia save that it sometimes ran in families. He went on to say that his overall view was that, in the present state of medical knowledge, it would be


unwise to assume that Offord's experiences could not contribute in some part to the development of his condition.
It seems to me, therefore, that one can say straight away that medical research is constantly producing fresh and sometimes contradictory evidence, and what may have been the case even in 1960 is not necessarily the same in 1966. Since I have prepared the case and it has had some publicity, I have had communication with other people who have suffered, or are suffering, from the same complaint. I have not been able to check this evidence completely, but it seems that in the United States there has been some fresh research evidence made available recently which suggests that stress, strain and anxiety can be contributory factors in this disease. If this is true, it opens up a completely fresh line of evidence which never came in front of the tribunal and which, indeed, at that time, in 1960, was unknown. This could have a very considerable bearing on my constituent's case. There are one or two other things which ought to be borne in mind, but I make that point particularly to the Parliamentary Secretary.
When Mr. Offord returned home in 1946 he weighed 11½ stone. Within a very short time his weight had gone up to 16 stone. That is a condition which is just about as bad for this disease as could possibly be. This very sudden increase in weight was not, as he said, because he had made a pig of himself. It was the result of the fact that his body was at once released from the privations of being a prisoner of war and enabled to eat what at that time was no more than an adequate ration at home. He maintains that this was another factor which was not brought out at the tribunal which could have had some effect on his constitution and on the course of the disease.
There is also the point that if Mr. Offord had never gone into the Army, when he started to have trouble with his legs he would have at once gone to the doctor, suspecting that something was wrong. But in the event he had the symptoms of numbness in his legs for three years before he did anything about it. He gave as his reason for this the fact that having had the very bad leg ulcers as a prisoner of war he expected that something would be wrong with his

legs when he came out, and, therefore, he did not bother to go for treatment. Like many ex-prisoners of war when they came home, he expected that something would be wrong with him and so did not go for expert medical advice when he should have done, and as he probably would have done if he had not been a prisoner of war.
All these are facts which I think are important to this man's case. I ask the Parliamentary Secretary to be as sympathetic as he possibly can. This is a case where the medical evidence is contradictory, but there are fresh factors coming to light which I think call for a further answer and, possibly, examination. I am very grateful to the Parliamentary Secretary for the trouble that he has taken in the case, both in a letter to me some time ago and in the preparation which he has carried out for this debate.
I have known Mr. Offord for a number of years. I know his background and I know of his courage and his terrible disability. On Saturday when I visited him I was able to lift his artificial legs. To carry them around all day must be a tremendous effort, and one that does not get any easier as the years go by. His amputations are not below the knee, so that there is no help from the stumps. They are well up his thighs, and this makes it very much more difficult.
I always felt comforted in the knowledge that Mr. Offord was receiving a disability pension and it was a shock to many people, and certainly to me, to find out that this was not the case. Had it not been for the right hon. Gentleman the Member for Derby, South (Mr. Philip Noel-Baker), I would not have had this case drawn to my attention. It was through a constituent of the right hon. Gentleman's that this happened.
I began by saying that few families in East Anglia did not suffer some loss or heartache as a result of the fighting in South-East Asia. Therefore, even though the tribunal ruled accordingly, and even if the fresh evidence I have produced is not considered to be of sufficient importance, there is nothing to stop the Minister, as an act of grace, from giving a pension if she so desires.
I know that this is difficult because it means going against the considered


opinion of a tribunal. But if the Minister does so, she will be considered in East Anglia as doing no more than justice to many brave men who suffered in Japanese hands. I hope that the Joint Parliamentary Secretary will not fall back on the principle of creating a precedent, for we all hope that the circumstances which forced Mr. Offord to spend these years in Malaya and Siam will never be repeated and the precedents that might be created must be diminishing in number very considerably each year.
Here we have a case where there is some doubt and where there will always remain some doubt. In view of the fresh evidence that may be coming forward, and probably is coming forward, I hope that the Parliamentary Secretary can give us a favourable answer.

11.23 p.m.

Mr. Philip Noel-Baker: I thank the hon. Member for Lowestoft (Mr. Prior) for raising this case and, like him, I thank my hon. Friend the Joint Parliamentary Secretary and his colleagues in the Ministry, the officials, for the great trouble they have already taken to answer our letters and make investigations. I rise, by courtesy of the hon. Member for Lowestoft, because the tragic case of Mr. Offord was drawn to my attention quite a long while ago, and again very recently, by close friends of his, Mr. and Mrs. Peterson, who are my constituents in South Derby.
I will not traverse again the powerful and moving case made by the hon. Gentleman. I heard it with growing sympathy and, if I may say so, with mounting conviction that not only in morality, but in medical appreciation, his conclusion was right. I fully understand the professional evidence on which the tribunals and the Minister have made their decisions that Mr. Offord has no claim to pension; I understand the argument that he suffers from the congenital weakness of hypercholesterolaemia; I can understand that it was plain that this weakness was the reason for the amputation of his legs, first the right and then the left; I understand the contention of the Minister's medical advisers that hypercholesterolaemia was the sole and a sufficient reason for the amputations and that Mr. Offord's sufferings in a Japanese prisoner-of-war camp in no way predisposed him to the later ravages of the disease, or

made its effect upon him greater than it would otherwise have been.
But I venture to repeat what the hon. Gentleman said. There is now weighty evidence on the other side, the evidence of the specialists Mr. Craig, Mr. Owen and Professor Peart. Apart from their expert views, I find it very difficult to believe that three years and six months in a prisoner-of-war camp did not reduce Mr. Offord's resistance to the physical weakness he inherited at birth.
In October, 1945, I crossed the Atlantic in the "Queen Elizabeth" from Canada to Britain with 4,000 ex-Service men who had just come from Japanese prisoner-of-war camps. I was left with the conviction that the camps must have had a most grievously debilitating effect upon these men. We do not know how far psychological causes can break down resistance to infection, disease, or other weakness. Certainly the psychological results on most of those 4,000 men were very serious indeed. Add to Mr. Offord's suffering the fact that while he was in the prison camp he had malaria 12 times, tropical ulcers, of which the hon. Gentleman spoke, beriberi and yellow jaundice—I find it impossible to think that those sufferings did not help to break down Mr. Offord's resistance to his inherited weakness.
If the Parliamentary Secretary tells us that the law forbids the granting of a pension to Mr. Offord—and I share the hon. Gentleman's view that that is probably not so—then I urge on my hon. Friend, in the light of the new evidence which the hon. Gentleman has produced, that the law should now most certainly be changed.

11.30 p.m.

The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mr. Harold Davies): First may I say how grateful I am to the hon. Member for Lowestoft (Mr. Prior) for presenting me with the facts of his case before he addressed the House and for marshalling his case as he did. I can tell the hon. Gentleman and my right hon. Friend the Member for Derby, South (Mr. Philip Noel-Baker) that no case which I have had on my desk has given me more concern for many months. The House will know that the then hon. Member for Westmorland, who was my predecessor, also had to deal with this case,


so that it has come before Ministers from both parties. Unfortunately, under both Administrations the conclusion has been the same.
However, I have listened with care to what the hon. Gentleman has said about this exceptionally tragic case and I share his sympathy and that expressed in the moving speech of my right hon. Friend. I am sure that the House would wish me to pay tribute to the sincere and temperate way in which the hon. Gentleman and my right hon. Friend have put their case.
The facts have already largely been presented. Mr. Offord was a prisoner of war of the Japanese and the hon. Gentleman gave some details of his privations and hardships. I know the part of the world concerned very well and I remember seeing in Rangoon Gaol the conditions which some prisoners of war had had to suffer, as I saw them too in the jungles of Malaya and in Siam and Indochina. I know what the troops of all nations went through during that terrible period.
Mr. Offord was a prisoner of war; he was ill; he did suffer from malaria and it is true that he had tropical ulcers and beriberi and jaundice. I do not want to appear to minimise these things. They are, indeed, distressing, and they were experienced by many prisoners of war in that part of the world. My right hon. Friend the Member for Derby, South has the honour to represent a part of Britain from which came many of the men who had such experiences in the Far East.
Mr. Offord was released from the Army as fit for further service in June, 1946, and it was not until 1954, eight years later, that he claimed a war pension for the amputation of his right leg. The hon. Gentleman explained the reasons for some of the delay. As a layman and not a medical man, I hate using medical terms, but, for the sake of accuracy, I have to do so. The amputation was the result of a circulatory disease called essential hypercholesterolaemia. Mr. Offord associates this with his captivity.
He first consulted his doctor in 1949, a point which the hon. Gentleman mentioned and which we have recorded. In 1954, we arranged for him to be taken to Roehampton Hospital where there is a unit specialising in tropical

diseases. This illustrates the care which any Administration takes in such a case. No residual disablement was found from the various conditions he had suffered when a prisoner, but the diagnosis of hypercholesterolaemia was confirmed. Our doctors had to advise that this was an inborn error of metabolism, genetically determined, which causes the body to lay down fatty tissues in the wrong places, and that it was unrelated to any factors in Mr. Offord's service.
I know that this sounds technical, but we must get the medical facts on the record. Mr. Offord then appealed to the Pensions Appeal Tribunal. He was represented by counsel, briefed by the Officers' Association. The tribunal upheld our view, that the condition was neither attributable to nor aggravated by his service.
In 1958 Mr. Offord's other leg had to be amputated as a result of the progress of the disease. Again he claimed, but, since the underlying condition was the same, we were again obliged to reject his claim. He appealed once more to the tribunal, and on this second occasion he submitted, in support of his appeal, the very three further medical opinions to which my right hon. Friend has referred. It was common ground that the disease could not be attributable to his service, but they argued, in effect, that insufficient was known about the disease to be able to say with certainty that his experiences in captivity had not possibly made it worse than it otherwise would have been. On this occasion Mr. Offord was represented by the British Legion, which is-very experienced in these matters. The whole of the evidence was before the tribunal, which considered the issue de novo. Its finding was the same as the earlier tribunal.
I should mention here that we have accepted that any effects remaining from malnutrition and diseases which he suffered while a prisoner would be attributable to service, but as I have said, our doctors found no disablement from these conditions. As the House knows, the Pensions Appeal Tribunal is an entirely independent body, appointed by the Lord Chancellor, and its decision is statutorily final, subject only to a right to appeal in an entitlement case on a point of law to the High Court. I want to repudiate any suggestion that if evidence is advanced in favour of a claimant, the


Ministry sets out to prove the contrary. We have never tried to do that. It is not a question of proving anything, but of trying to decide a claim fairly and as generously as possible, and giving the tribunal the fullest possible evidence. It is True to say that in no Administration is there any lack of sympathy by the Ministry of Pensions doctors about such cases.
Medicine is not an exact science, and I want to make it clear that a war pension claimant is given the benefit of the doubt. That remains true, however long after a man's period of service a claim is made Mr. Offord claimed some eight years after his release under Article 5 of the Royal Warrant, which explicitly lays it down that the benefit of any reasonable doubt shall be given to the claimant. Nevertheless, although there was conflicting evidence; the tribunal did not feel that there was a reasonable doubt on the side of Mr. Offord.
What can I say tonight that will offer any hope? There is a procedure whereby, by consent, a case can be remitted to the High Court for rehearing by the tribunal. But I must emphasise to my right hon. Friend and to the hon. Member for Lowestoft that there must be new and cogent evidence which sheds an altogether fresh light on the case, and not merely a reconsideration of the issues within the boundary of the facts as already known.
I have listened with care to what my right hon. Friend and the hon. Member for Lowestoft have said so cogently, pleasantly and constructively, and I am sure that Mr. Offord has had two excellent advocates in the House tonight. But I must not mislead the House. The case has had some publicity, and I know that the hon. Member for Lowestoft has had a communication from the United States indicating some fresh evidence to the effect that stress, strain or anxiety could accelerate the disease. I think those were the words.

Mr. Prior: They could contribute to it.

Mr. Davies: They could contribute, yes. If that be true, then we will consider carefully what the hon. Gentleman has said tonight. But I do not want to raise any false hopes. The case has been going on for a long time.
I want it to be absolutely clear that I have not tried to make a passing reference—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at seventeen minutes to Twelve o'clock.